What are the two options for calculating the Boulder Designs Royalty Fee?
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 calculated as the greater of two options. The first option is a percentage of Collected Gross Revenue, which is 7% of Gross Revenue. Gross Revenues include all income received from customers for goods and services, including enrollment fees, from any person or business entity. Gross Revenues also include proceeds from business interruption insurance and revenue from National Accounts. However, Gross Revenues exclude insurance payments, refunds, sales taxes paid to governmental authorities, and rebates received from manufacturers or suppliers.
The second option is a minimum monthly royalty fee. This fee varies depending on the year of the franchise agreement. In the first year, it is $750 per month. In the second year, it increases to $950 per month. From the third year through the remainder of the term, the minimum monthly royalty fee is $1,500 per month.
In practical terms, a Boulder Designs franchisee will pay the higher of 7% of their gross revenue or the specified minimum monthly fee. This ensures that Boulder Designs receives a consistent royalty income, while also allowing them to benefit from a franchisee's success. The royalty fees, along with other amounts owed to Boulder Designs, may be deducted from payments that customers submit through the Order Processing System or via a separate ACH withdrawal.