How is the Royalty fee paid for a Beard Papas franchise?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
| Amount | Due Date | Remarks | |
|---|---|---|---|
| Royalty (Notes 2 and 3) | 5% of Gross Sales | Monthly on the 7th of each month for the preceding month | Will be debited automatically from your bank account by ACH or other means designated by us. |
| Brand Development Fund (Note 4) | Up to 2% of Gross Sales | Monthly on the 7th of each month for the preceding month | Will be debited automatically from your bank account by ACH or other means designated by us. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, the royalty fee is 5% of gross sales and is due monthly on the 7th of each month for the preceding month. Payment will be automatically debited from the franchisee's bank account through ACH or other means designated by Beard Papas. Franchisees are required to deposit gross sales into designated bank accounts subject to ACH authorization. They must also install and use pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit, and/or electronic funds transfer systems designated by Beard Papas. Franchisees are responsible for all bank service charges and fees related to these electronic debits.
This automatic debit system ensures that Beard Papas receives royalty payments promptly and efficiently. It also reduces the administrative burden on both the franchisee and franchisor. However, franchisees must ensure they have sufficient funds in their designated bank accounts to cover the royalty payments to avoid non-compliance fees or failed electronic fund transfer fees. The FDD specifies a fee for NSF checks or failed electronic fund transfers equal to 5% of the amount or $50, whichever is greater, or the maximum fee allowed by law.
Franchisees should be aware of the importance of accurate gross sales reporting, as the royalty fee is directly tied to this figure. The FDD defines "Gross Sales" broadly, including revenues from all business and customers, whether in cash, credit, or other forms of consideration. It is crucial for franchisees to maintain meticulous records of all sales transactions to ensure accurate royalty payments. Gross sales do not include sales taxes that you collect and remit to the proper taxing authority, and authorized promotional discounts that you provide to customers.
Overall, the royalty payment system for Beard Papas franchises is fairly standard within the franchise industry, with its reliance on electronic payments and a percentage of gross sales. Prospective franchisees should carefully review the ACH Authorization Form (Franchise Agreement, Exhibit 7) and understand their obligations regarding gross sales reporting and electronic payment systems.