How does the occupancy rate of the Beehive Homes Home affect the commencement of Franchise Royalty payments?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
f the Gross Revenues. The Franchise Royalty shall be paid monthly on or before the 10th day of each calendar month based upon the Gross Revenues of the preceding calendar month. The Franchise Royalty will commence on the earlier of (i) the first day of the first full calendar month following the date on which the Home reaches a 50% occupancy; or (ii) the first day of the sixth full calendar month following the date of opening of the Home. For purposes of determining the Franchise Royalty, "Gross Revenues" is defined to be the gross receipts of every kind and nature whatsoever received by Franchisee directly or indirectly in connection with the operation of the franchised business, the Home and/or providing of services, excepting only the amount of sales or use taxes levied upon the sale of goods or services by a governmental taxing authority and actually paid to said taxing authority.
- 4.4. Determination and Method of Payment of Franchise Royalty. The calculation and payment of the Franchise Royalty specified in Section 4.3 above shall be made as follows:
- (a) On or before the 10th day of each calendar month Franchisee shall provide to Franchisor a report the financial activity of the Home for the immediately preceding calendar month to Franchisor. The report shall show Gross Revenues, all monies received or accrued, all sales or other services performed, and such other information concerning the financial affairs of Franchisee as Franchisor may reasonably require. For purposes of this Agreement, such information shall be referred to as the "Monthly Revenues Report."
- (b) The Franchise Royalty shall be due and payable on the same date that the corresponding Monthly Revenues Report is due, and shall be paid concurrently with the submission of the corresponding Monthly Revenues Report.
- (c) If the Franchisee fails to deliver the required Monthly Revenues Reports to Franchisor on or before the 10th day of each month, a late charge of $100.00 shall be assessed for each Monthly Revenues Report which is not timely filed.
- (d) If the Franchisee fails to pay any Franchise Royalty when due, Franchisee shall be assessed a one-time late charge equal to the lesser of ten percent (10%) of the Franchise Royalty due or, if less, the maximum late charge assessable under the laws of the state in whic
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the occupancy rate of a Beehive Homes location directly impacts when franchise royalty payments begin. Franchisees must pay a franchise royalty of 5% of gross revenues. However, the start date for these royalty payments is determined by whichever comes first: either the first day of the full calendar month after the Home reaches 50% occupancy, or the first day of the sixth full calendar month following the Home's opening.
This means that if a Beehive Homes location reaches 50% occupancy quickly, the franchisee will start paying royalties sooner. Conversely, if occupancy is slow to build, the royalty payments will be deferred until the sixth month after opening, regardless of the occupancy rate. This provides a grace period for new locations to establish themselves before the royalty obligations begin.
Beehive Homes franchisees are required to submit a Monthly Revenues Report to the franchisor by the 10th day of each month, detailing the Home's financial activity for the previous month, including gross revenues and other relevant financial information. The franchise royalty payment is due at the same time as this report. Failure to submit the report on time results in a late fee of $100, and late royalty payments incur a charge equal to the lesser of 10% of the royalty due or the maximum late charge permitted by state law.
Understanding this policy is crucial for prospective Beehive Homes franchisees as it directly affects their initial financial projections and cash flow management. Franchisees should aim to achieve a 50% occupancy rate as quickly as possible to align their royalty payment obligations with revenue generation. Careful planning and effective marketing strategies are essential to reach this occupancy target and optimize the financial performance of the Beehive Homes franchise.