What is the financial impact of the royalty deduction on the Receiving Cross-Selling Fee for a Belocal franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) The Receiving Franchisee will receive a Receiving Cross-Selling Fee equal to 75% of the monthly Cash Received for that print advertisement, less the Royalty of 15% of the Cash Received and the Publication Expenses.
Any time during the Term of this Agreement, with no prior notices unless otherwise required by law, Franchisor reserves the right to change the Cross-Selling Fee to be calculated as follows:
- (i) The Selling Franchisee would receive an Outgoing Cross-Selling Fee equal to 10% of the monthly Cash Received for each print advertisement sold by the Selling Franchisee that will be included in the publication managed by the Receiving Franchisee.
- (ii) The Managing Franchisee (as defined by Franchisor's then-current Franchise Brand Standards Manual) would receive a Managing Cross-Selling Fee equal to 30% of the monthly Cash Received for each print advertisement, less the Royalty of 15% of the Cash Received.
- (iii) The Receiving Franchisee would receive a Receiving Cross-Selling Fee equal to 60% of the monthly Cash Received for that print advertisement, less the Publication Expenses.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a royalty of 15% of the cash received is deducted from the Receiving Cross-Selling Fee. Currently, a Receiving Franchisee gets 75% of the monthly cash received for a print advertisement sold by a Selling Franchisee and included in the Receiving Franchisee's publication. However, this 75% is then reduced by a royalty of 15% of the cash received, as well as publication expenses.
Belocal retains the right to change the cross-selling fee structure. Under the changed structure, the Receiving Franchisee would receive 60% of the monthly cash received for the print advertisement, less publication expenses. In this scenario, a Managing Franchisee would also receive 30% of the monthly cash received, less the 15% royalty.
For a prospective Belocal franchisee, this means that the actual revenue received from cross-selling is less than the stated percentage due to the royalty and publication expense deductions. The franchisee should consider these deductions when projecting potential income from cross-selling activities. It is also important to note that Belocal can change the cross-selling fee structure, which could impact the franchisee's revenue from cross-selling.