How often does Big O Tires update and distribute the Royalty Matrix?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
The Royalty Matrix provides for a royalty rate for a given year based on your Adjusted Gross Sales for that year. This Royalty Matrix will change each year based on the prior year average retail store sales. For new Stores, under the current Royalty Matrix, generally the maximum Royalty Rate will not exceed 5.0% and the lowest royalty rate will not be less than 3.5%. The minimum royalty rate under the Royalty Matrix is subject to change by Big O. Big O will update and distribute the Royalty Matrix annually. For instance, if you sign the Franchise Agreement (Exhibit B-1) in 2025, the initial Royalty Matrix will be the 2025 Royalty Matrix, it will be updated annually. Big O may also adjust the Royalty Matrix during the course of a year. The Royalty Matrix will establish the minimum amount at which a rebate may be earned by a single Store, which minimum amount is the greater of: (a) $1.47 million, or (b) the average Store Gross Sales of all Big O stores for the previous year, excluding the top 10% of Stores and bottom 10% of Stores and adding $190,000 and rounding down to the nearest $10,000.
Source: Item 6 — OTHER FEES (FDD pages 21–35)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the Royalty Matrix, which determines the royalty rate based on a franchisee's Adjusted Gross Sales, is updated and distributed annually. The Royalty Matrix changes each year based on the prior year's average retail store sales. Big O Tires may also adjust the Royalty Matrix during the course of a year.
For a new Big O Tires store, the Royalty Matrix generally sets the maximum royalty rate at 5.0% and the lowest at 3.5%. However, the minimum royalty rate is subject to change by Big O Tires. The Royalty Matrix also establishes the minimum amount at which a rebate may be earned by a single store, calculated as the greater of $1.47 million or the average store Gross Sales of all Big O Tires stores for the previous year (excluding the top and bottom 10%), plus $190,000, rounded down to the nearest $10,000.
For prospective franchisees, it is important to understand that while the Royalty Matrix is updated annually, Big O Tires retains the right to adjust it during the year. This could impact the royalty rates franchisees pay. Franchisees should also be aware of how the minimum rebate amount is calculated, as it affects their potential to earn rebates. Reviewing Schedule 9 to Exhibit B-1 of the Franchise Agreement will provide further details on the Royalty Matrix and its application.