What are the two franchise fee options for a Bombs Away franchise, and what royalty fees are associated with each?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 6-8% of your gross sales | Monthly, on the 2nd day of the following month | We offer two options, a franchise fee of $15,000 with an 8% royalty fee or a franchise fee of $25,000 with a 6% Royalty Fee. See Note 1 and Note 2. |
Notes
-
- "Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
-
- We currently require you to pay royalty fees and other amounts due to us by preauthorized bank draft. However, we can require an alternative payment method.
Source: Item 6 — OTHER FEES (FDD pages 9–13)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, there are two options available regarding the initial franchise fee and ongoing royalty payments. A franchisee can elect to pay a lower initial franchise fee of $15,000, but will then be obligated to pay a higher royalty fee of 8% of gross sales. Alternatively, a franchisee can pay a higher initial franchise fee of $25,000, which then lowers the ongoing royalty fee to 6% of gross sales.
The royalty fee is calculated as a percentage of gross sales, which Bombs Away defines in the franchise agreement as the total dollar amount of all sales generated through your business, including payments for services or products sold, whether for cash or credit. Gross sales does not include bona fide refunds to customers, sales taxes collected, the sale of used equipment not in the ordinary course of business, or sales of prepaid cards or similar products; however, the redemption of any such card or product will be included in gross sales.
This provides prospective Bombs Away franchisees with a choice that may be influenced by their access to capital and their projections for sales volume. A franchisee with less available capital might prefer the lower initial franchise fee, while a franchisee anticipating higher sales might find the higher initial fee worthwhile to secure the lower royalty rate. All royalty fees and other amounts due to Bombs Away must be paid via preauthorized bank draft, though Bombs Away can require an alternative payment method.