What are the two conditions that trigger the commencement of the Beehive Homes franchise royalty?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the franchise royalty, which is 5% of gross revenues, becomes due based on whichever comes first: either the first day of the first full calendar month after the Home reaches 50% occupancy, or the first day of the sixth full calendar month after the Home opens.
This means a new Beehive Homes franchisee will start paying royalties either when their facility is half full or after six months of operation, regardless of occupancy rate. This ensures that Beehive Homes receives royalties even if the franchisee is still building up their clientele.
For a prospective franchisee, this highlights the importance of quickly reaching at least 50% occupancy to maximize revenue before royalty payments begin. It also sets a clear timeline for when royalty obligations will start, allowing for financial planning. The franchisee needs to be prepared to pay the 5% royalty fee after the earlier of these two conditions.