How are Better Blend's royalties determined?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company's revenue consists of fees from franchised restaurants operated by conventional franchisees. Revenue from conventional franchised restaurants include initial franchise fees, royalties based on percent of sales, marketing fees based on percent of sales, and development fees for locations the franchisee opens in addition to the initial location.
Royalties are collected on a weekly basis and are based on certain percentage as specified on the franchise agreement. Marketing fees are based on up to 1% of gross revenue. The marketing fund is used for marketing expenses related to maximizing public recognition of the Company's brand and marketing fund.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, royalties are collected weekly and are a percentage of sales, as specified in the franchise agreement. In addition to royalties, Better Blend franchisees also pay marketing fees of up to 1% of gross revenue. These marketing fees are earmarked for marketing expenses aimed at enhancing public recognition of the Better Blend brand and supporting the marketing fund.
For a prospective Better Blend franchisee, this means that a portion of their weekly gross sales will be remitted to Better Blend as a royalty. The exact percentage will be detailed in the franchise agreement, so it is crucial to carefully review this document. Additionally, up to 1% of gross revenue will be allocated to marketing efforts, which could impact the franchisee's profitability but also contribute to brand awareness and potentially increased sales.
It is typical in the franchise industry for franchisors to collect royalties as a percentage of gross sales. This arrangement aligns the franchisor's income with the franchisee's success, incentivizing the franchisor to provide ongoing support and guidance. The marketing fee structure is also common, allowing franchisors to manage brand-wide marketing initiatives that benefit all franchisees. Franchisees should inquire about how the marketing funds are managed and what specific marketing activities are planned.