How is the pre-conversion gross revenue determined for a converting Benjamin Franklin Plumbing business?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor agrees to waive certain amounts due under the Note, up to the entirety of the Note Amount, provided Franchisee's Gross Revenue in the fifth (5th) year of operation following the Agreement Date exceeds the pre-conversion gross revenue of the Existing Plumbing Business by certain thresholds. Such pre-conversion gross revenue shall be determined by the prior year's P&L or prior year tax return for the converting Plumbing business, as described in the table below.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing FDD, the pre-conversion gross revenue of an existing plumbing business is determined by the prior year's Profit and Loss statement (P&L) or the prior year's tax return. This figure is a key component of the Conversion Incentive Program addendum, which applies specifically to conversion franchise agreements.
Benjamin Franklin Plumbing uses the pre-conversion gross revenue to calculate potential waivers on amounts due under a Promissory Note. This note covers the Franchise Fee and any applicable Additional Population Fee, less a $5,000 Conversion Down Payment. The franchisor may waive amounts due under the note if the franchisee's gross revenue in the fifth year of operation exceeds the pre-conversion gross revenue by certain thresholds.
For a prospective franchisee converting an existing plumbing business, this means the accuracy and availability of their previous year's financial records are crucial. These records will directly impact the calculation of revenue growth targets required to potentially reduce or eliminate the deferred Franchise Fee. Franchisees should ensure their P&L statements or tax returns accurately reflect their business's financial performance to maximize the potential benefits of the Conversion Incentive Program.