What is the frequency of billing for royalties by Beauty Bungalows?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
When a franchisee purchases a franchise, the Company grants the franchisee the rights to operate in a designated area and to use the proprietary methods, techniques, trade dress, trademarks, and logos ("the license"). The license is considered to be symbolic intellectual property. Revenues related to the license are continuing royalties based on a fixed percentage of gross sales of each location. These revenues will be used to continue the development of the Company's brand, the franchise system and provide ongoing support for the Company's franchisees over the term of the agreement. The royalties are billed monthly and are recognized as revenue when earned. For the years ended December 31, 2024 and 2023, there were no royalties earned.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, royalties are billed to franchisees on a monthly basis. These royalties are calculated as a fixed percentage of the gross sales for each Beauty Bungalows location. The FDD specifies that these royalty revenues are intended to support the continued development of the Beauty Bungalows brand, the franchise system itself, and to provide ongoing support to franchisees throughout the duration of their franchise agreement.
For a prospective Beauty Bungalows franchisee, this monthly billing cycle means that royalty payments will be a recurring, predictable expense tied directly to their sales performance. This contrasts with some franchise systems that might bill royalties quarterly or annually. The monthly billing could help franchisees manage their cash flow more effectively, as the royalty obligation is spread out over the year.
It is important to note that, according to the FDD, Beauty Bungalows had not earned any royalty revenue for the years ended December 31, 2024, and 2023. This could be due to the franchise system being relatively new or having a limited number of operating locations during those periods. A prospective franchisee should inquire about the expected royalty rate and how it is calculated to fully understand this ongoing expense.