Under what conditions might Big O Tires waive or defer franchise fees?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
We may elect to waive or credit, reduce or defer payment of any and all fees and charges of any kind that are payable to us in connection with a franchise on a case-by-case basis.
Note 2: The following royalty provisions control the administration of the royalty for Business Format Franchisees –
- a. The royalty rate that you pay for the period from the date your Store begins operations until the end of that calendar year will generally be 5.0%. However, you may be able to receive reductions or rebates of a portion of these royalty payments based on the Royalty Matrix as described below. The royalty rate applies to your Adjusted Gross Sales.
- i. Your royalty rate will be calculated in accordance with the Royalty Matrix, which is included in Schedule 9 to Exhibit B-1 (the BF Franchise
Agreement). 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.
Source: Item 6 — OTHER FEES (FDD pages 21–35)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, Big O Tires may elect to waive, credit, reduce, or defer payment of any and all fees and charges payable in connection with a franchise. This decision is made on a case-by-case basis, providing the franchisor with the flexibility to respond to individual franchisee circumstances.
Additionally, the royalty rate that a franchisee pays from the date their store begins operations until the end of that calendar year will generally be 5.0%. However, franchisees may be able to receive reductions or rebates of a portion of these royalty payments based on the Royalty Matrix. For certain incentive programs identified and described in Item 5, Big O Tires will temporarily charge reduced royalties during the first term of the Franchise Agreement, depending on the program. The reduced rates range from 0% to 3% of the monthly Adjusted Gross Sales during the first two to three years following the commencement date of the store.
Furthermore, Big O Tires has a policy under which they will rebate a portion of royalty payments to a qualified Business Format Franchisee if Big O Tires fails to meet certain "fill rate" standards for certain "Big O Program Products". Failure to fulfill orders due to causes beyond their control (such as natural disasters, strikes, governmental actions, war(s), or other causes), do not count against the Fill Rate or qualify a franchisee for a royalty rebate. These policies and programs can change periodically.
These potential waivers, credits, reductions, and deferrals offer prospective Big O Tires franchisees some financial flexibility. Franchisees should inquire about the specific conditions and eligibility requirements for these programs and policies, as well as how the Royalty Matrix is calculated and updated annually, to fully understand the potential for fee adjustments.