What is the maximum continuing royalty fee that a Ben Jerrys franchisee must pay?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
4.2 Each month during the term of this Agreement, OPERATOR shall pay BEN & JERRY'S a continuing royalty fee in an amount that will not exceed five percent (5.0%) of the Gross Sales (as defined in Section 4.4 below) of the Scoop Shop during the prior month.
4.4 As used in this Agreement, "Gross Sales" means revenue from the sale of all Products and all other income, whether for cash or credit, of every kind and nature related to the Scoop Shop (including Off-Premises Activities, On-Demand Sales and Mobile Vending), including proceeds of any business interruption insurance policies, regardless of collection in the case of credit.
Source: Item 22 — CONTRACTS (FDD pages 133–134)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, a franchisee must pay a continuing royalty fee each month. This fee will not exceed five percent (5.0%) of the Scoop Shop's Gross Sales during the prior month. Gross Sales include revenue from all Products and other income related to the Scoop Shop, including Off-Premises Activities, On-Demand Sales, and Mobile Vending, whether for cash or credit. Gross Sales also includes proceeds from any business interruption insurance policies.
For a prospective Ben & Jerrys franchisee, this means that the royalty payments will fluctuate based on the store's monthly revenue. A higher revenue month will result in a larger royalty payment, while a lower revenue month will result in a smaller payment. The franchisee needs to factor in this ongoing expense when projecting their monthly profitability.
It's important to note that the 5.0% is the maximum royalty fee, and the actual percentage could be lower. However, franchisees should budget for the maximum amount to avoid any financial surprises. Additionally, the franchise agreement may stipulate a higher royalty fee under certain circumstances, such as when the franchisee executes a new franchise agreement after a transfer or renewal. Therefore, it is crucial to carefully review the franchise agreement and any related addenda to fully understand the royalty fee obligations.