How does the opening date of the Beehive Homes Home affect the commencement of Franchise Royalty payments?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- Franchise Royalty. In addition to the Initial Franchise Fee, Franchisee promises and agrees to pay to Franchisor a franchise royalty (the "Franchise Royalty") in the amount of five percent (5%) of 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 commencement of franchise royalty payments is directly linked to the home's opening date and occupancy rate. Specifically, the royalty payments, which are 5% of gross revenues, begin on the earlier of two conditions. The first condition is the first day of the full calendar month following the date the Beehive Homes location reaches 50% occupancy. The second condition is the first day of the sixth full calendar month following the date of opening.
This means a new Beehive Homes franchisee has a grace period before royalty payments begin. This grace period allows the franchisee to focus on establishing the business and reaching a stable occupancy level. If the location reaches 50% occupancy quickly, royalty payments will start sooner. However, even if occupancy is below 50%, royalty payments will commence after six full calendar months from the opening date.
For a prospective Beehive Homes franchisee, this information is crucial for financial planning. They need to project occupancy rates and understand that royalty payments will start within six months regardless of occupancy. This requirement ensures that Beehive Homes receives royalty payments within a reasonable timeframe, while also giving the franchisee some initial time to stabilize the business. Franchisees must submit a Monthly Revenues Report to Beehive Homes by the 10th day of each month, along with the royalty payment. Failure to submit the report on time results in a late fee of $100, and failure to pay royalties when due results in a one-time late charge equal to the lesser of 10% of the royalty due, or the maximum late charge assessable under the laws of the state in which the Home is located.