What is the Royalty Rate that Beard Papas franchisees must pay?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 2: Royalty Fees – The royalty fee is a continuing monthly fee equal to 5% (the "Royalty Rate") of your monthly Gross Sales (the "Royalty Fee"). If any federal, state or local tax other than an income tax is
imposed on the Royalty Fee which we cannot directly, and dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective Royalty Fees received by us is not less than 5% of your Gross Sales.
Note 3: Gross Sales – "Gross Sales" means the total dollar sales from all business and customers of your Shop and includes the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person or Corporate Entity from business conducted or which started in, on, from or through your Shop and/or your Shop Location, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement. Gross Sales include the total gross amount of revenues and sales from whatever source derived from and/or derived by you (including any person and/or Corporate Entity acting on your behalf) from business conducted within and/or outside your designated territory that is related to your Shop and/or a competitive business located and/or operated at your Shop Location, within your designated territory, outside your designated territory, and/or otherwise. Gross Sales do not include (a) sales taxes that you collect and remit to the proper taxing authority, and (b) authorized promotional discounts that you provide to customers.
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, the standard royalty fee is 5% of gross sales. This is a recurring monthly fee, referred to as the "Royalty Rate," and is calculated from the franchisee's monthly Gross Sales. The Royalty Fee is due on the 7th of each month for the preceding month and will be automatically debited from the franchisee's bank account via ACH or other means designated by Beard Papas.
Gross Sales are defined as the total dollar sales from all business and customers of the Beard Papas shop, including revenues from any source, whether in cash, credit, or other forms of consideration. Gross Sales do not include sales taxes that the franchisee collects and remits to the proper taxing authority, or authorized promotional discounts provided to customers.
If any federal, state, or local tax other than an income tax is imposed on the Royalty Fee, and Beard Papas cannot directly offset this against taxes required to be paid under applicable federal or state laws, the franchisee must compensate Beard Papas so that the net Royalty Fees received are not less than 5% of Gross Sales. This ensures that Beard Papas receives the full 5% royalty, regardless of any additional taxes imposed on the royalty fee itself. This is a fairly standard royalty arrangement for franchises.