What is the minimum royalty fee for a Bor Restoration franchise?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE (Note 1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Royalty | The greater of 7% of "Gross Sales" on water, fire, contents cleaning, and mold remediation services, plus 5% on any after-remediation repair services (each being the "Percentage Royalty") or $500 (Minimum Royalty). (Note 2) | or before the 16th day of each month. If the 16th falls on a Saturday, Sunday, or federal or state holiday, the Royalty will be | Payable to us through an automated clearinghouse (ACH) transaction. |
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- The Minimum Royalty will never be less than $500 during the initial term of the Franchise Agreement. The Minimum Royalty may increase in the 36th month and seventy-second month of the initial term to reflect an increase in the Consumer Price Index for all urban consumers (CPI-U) as quoted by the U.S. Bureau of Labor Statistics. We will start billing for Royalties and all other fees collected with the Royalty 45 days after your "Opening Date." (Item 11).
"Gross Sales" means all revenue and income actually received by you from the operation of your Business, including all revenue received from Clients you directly bill, and also includes all revenue received from a Client's insurance carrier, late fees, revenue generated over the billed amount, and any other amount charged to Clients, whether received in cash, in services in kind, from barter or exchange, on credit or otherwise. You may deduct from Gross Sales all sales tax or similar taxes, which by law are chargeable to Clients by any taxing authority and are collected by you. You may not deduct the amount of any documented discounts, refunds, or credits.
Source: Item 6 — Other Fees (FDD pages 10–15)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, the minimum royalty fee is $500. However, the royalty fee is structured as the greater of 7% of "Gross Sales" on specific services (water, fire, contents cleaning, and mold remediation) plus 5% on after-remediation repair services, or the $500 minimum. This means that even if the percentage royalty calculation is less than $500, the franchisee must still pay a minimum of $500.
This minimum royalty provides Bor Restoration with a guaranteed income floor from each franchise unit, regardless of its sales performance. For a new franchisee, especially in the early months of operation, the $500 minimum might be relevant if sales are still ramping up. It's important to note that this minimum royalty may increase in the 36th and 72nd months of the initial term to reflect increases in the Consumer Price Index (CPI-U), as reported by the U.S. Bureau of Labor Statistics.
The royalty fees are due on or before the 16th day of each month and are payable through an automated clearinghouse (ACH) transaction. Bor Restoration begins billing for royalties and other fees 45 days after the franchisee's "Opening Date." Understanding how "Gross Sales" is defined is crucial, as it includes all revenue and income received from the business operation, including revenue from clients directly billed, insurance carriers, late fees, and any other amounts charged to clients. Franchisees can deduct sales tax or similar taxes from Gross Sales, but not documented discounts, refunds, or credits.