Is the 7% Royalty Fee for Boulder Designs based on Gross Revenue or Collected Gross Revenue?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee | Amount1 | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee2,4 | The greater of: (i) The percentage of Collected Gross Revenue in accordance with the following schedule: 7% of Gross Revenue Or (ii) The minimum monthly Royalty Fee in accordance with the following schedule: Year 1 - $750/month Year 2 - $950/ month Year 3 thru remainder of term $1,500/month | First day of each month |
Note 4. "Gross Revenues" means the aggregate of all income and monthly fees Franchisee receives from customers for the purchase or provision of any goods or services, including enrollment fees, or any other person or business entity for the Franchised Business in connection with the Franchised Business (whether or not in accordance with the terms of the Franchise Agreement) and whether for check, cash, credit or otherwise, from the sale of products and services (including service charges in lieu of gratuity) regardless of the dollar amount Franchisee sells each product or service for, including, without limitation, all proceeds from any business interruption insurance and any revenue generated from National Accounts, but excluding (a) all insurance payments, check, cash, credit or debit card refunds made in good faith provided, prior to granting the refunds, the revenue related to the refunds was included in Gross Revenues, (b) any sales and equivalent taxes that Franchisee collects for or on behalf of and pay to any governmental taxing authority, and (c) any rebate Franchisee receives from a manufacturer or supplier.
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the royalty fee is based on Collected Gross Revenue. The franchisee must pay the greater of 7% of Gross Revenue or a minimum monthly royalty fee. The minimum monthly royalty fee varies depending on the year of the franchise agreement, starting at $750 per month in the first year, $950 per month in the second year, and $1,500 per month from the third year onwards.
"Gross Revenues" for Boulder Designs encompasses all income received from customers for goods and services related to the franchised business, including enrollment fees and proceeds from business interruption insurance, and revenue from National Accounts. However, it excludes insurance payments, refunds made in good faith (provided the revenue was initially included in Gross Revenues), sales and equivalent taxes collected for governmental authorities, and rebates received from manufacturers or suppliers.
This structure means that Boulder Designs franchisees need to carefully track both their gross revenue and their collected gross revenue to ensure they are paying the correct royalty fee. The minimum monthly royalty fee provides a baseline for Boulder Designs, ensuring a consistent income stream regardless of monthly revenue fluctuations at individual franchise locations. Franchisees should also be aware of what constitutes "Gross Revenues" to accurately calculate their royalty obligations.