What is the basis for the royalty fee that Bens Soft Pretzels franchises are required to pay?

According to the 2025 FDD, Bens Soft Pretzels franchises are obligated to pay a royalty fee that is calculated as a percentage of their gross sales. However, this calculation excludes sales tax, pre-approved coupons, and redemption of loyalty rewards. This means that the royalty is based on the actual revenue Bens Soft Pretzels franchisees retain from their sales, after deducting these specific items. The revenue is recognized weekly based on the prior week's sales.

For a prospective Bens Soft Pretzels franchisee, this means that the amount of royalty fees paid will fluctuate with the store's sales performance. Higher sales will result in higher royalty payments, while lower sales will decrease the royalty burden. The exclusion of sales tax, pre-approved coupons, and loyalty rewards from the gross sales calculation is beneficial for the franchisee, as it lowers the base on which the royalty fee is calculated.

It's important to note that Bens Soft Pretzels collects royalty fees on a weekly basis. Additionally, the FDD states that a receivable is recorded at year end based on average sales per day for the week that spans year end. This likely accounts for sales that have occurred for which payment has not yet been collected. This ensures that Bens Soft Pretzels receives its due royalties even for sales close to the fiscal year's end.