Are there any deductions allowed from the weekly royalty fee payments for a Bft franchise?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
5.2 Royalty Fee. Throughout the Term, Franchisee agrees to pay Franchisor, weekly, without setoff, credit or deduction of any nature, a royalty fee equal to seven percent (7%) of the Gross Sales (as that term is defined in Section 5.3, below) generated by the Studio over the immediately preceding week (the "Royalty" or "Royalty Fee").
- 5.3 Gross Sales. "Gross Sales" means the total revenue, in whatever form, generated by the Studio, whether or not in compliance with this Agreement and regardless of receipt, including all revenue generated from the sale and provision of any and all gift cards and other products and services at or through the Studio and all proceeds from any business interruption insurance related to the non-operation of the Studio. "Gross Sales" does not include (a) any sales tax and equivalent taxes that are collected by Franchisee for or on behalf of any governmental taxing authority and paid thereto, or (b) the value of any allowance issued or granted to any client of the Studio that is credited in good faith by Franchisee in full or partial satisfaction of the price of the Approved Products or Approved Services offered in connection with the Studio.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, franchisees are required to pay a weekly royalty fee equal to 7% of the studio's gross sales, without any setoff, credit, or deduction. This means that the franchisee must pay the full 7% of gross sales each week, regardless of any expenses or other financial considerations.
Gross sales for Bft include all revenue generated by the studio, including revenue from gift cards and proceeds from business interruption insurance. The only exclusions from gross sales are sales tax collected for governmental authorities and the value of allowances issued to clients that are credited in good faith towards the price of approved products or services.
This requirement for royalty payments without deductions is a standard practice in many franchise systems. It ensures a consistent revenue stream for Bft and simplifies the accounting process. However, it also means that franchisees must carefully manage their cash flow to ensure they can meet this obligation, even during periods of lower sales or higher expenses.