How does Buff City Soap calculate the 'Imputed Royalty' for company-owned BCS Makeries in Tables 2 and 3?

According to Buff City Soap's 2025 Franchise Disclosure Document, the company-owned BCS Makeries do not actually pay a royalty fee. However, for the purposes of financial representation in Tables 2 and 3, Buff City Soap calculates an 'Imputed Royalty'. This imputed royalty is based on the Net Sales of the company-owned stores multiplied by a 6% royalty rate.

This imputed royalty is included as an overhead cost in the financial performance representations for company-owned stores in the Memphis, TN and Dallas, TX metropolitan areas. By including this calculation, Buff City Soap aims to provide a more accurate comparison between the financial performance of company-owned and franchised locations, as franchisees are required to pay a 6% royalty on their net sales.

Prospective franchisees should understand that the 'Imputed Royalty' is a theoretical calculation for internal analysis and comparison. It does not represent an actual expense for the company-owned stores. This information is useful for understanding how the franchisor views the financial performance of its own stores relative to what it collects in royalties from franchisees. Reviewing the performance of company-owned stores, including the imputed royalty, can give potential franchisees insight into the brand's overall financial model.