Which section of the Burger King franchise agreement discusses the franchisee's obligations regarding royalty and advertising contributions?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
9. ROYALTY AND ADVERTISING CONTRIBUTION
A. Royalty
During the Term of this Agreement, Franchisee agrees to pay to BKC a royalty equal to the percentage of monthly Gross Sales set forth as the Royalty on the Key Contract Data page ("Royalty") for the use of the BURGER KING System and the BURGER KING Marks. Royalties shall be paid monthly by the tenth (10th) day of each month based upon Gross Sales for the preceding month.
B. Advertising, Sales Promotion and Public Relations
Source: Item 22 — CONTRACTS (FDD pages 125–127)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, Section 9 of the franchise agreement, titled "ROYALTY AND ADVERTISING CONTRIBUTION," outlines the franchisee's obligations regarding these payments. This section details the franchisee's responsibility to pay Burger King a royalty, calculated as a percentage of monthly Gross Sales, for the use of the Burger King system and marks. These royalties are due monthly, by the tenth day of each month, based on the previous month's Gross Sales.
In addition to royalties, Section 9 also addresses the franchisee's obligations concerning advertising contributions. It explains that any Royalty and Advertising Contribution not paid when due will incur a late charge. The late charge will be at the maximum rate allowed by Florida law, or if there is no maximum rate in Florida, it will be 18% per annum.
Furthermore, the franchise agreement specifies that Burger King or its representatives have the right to audit the franchisee's books, records, and tax returns to ensure accurate reporting of Gross Sales. If an audit reveals an understatement of Gross Sales, the franchisee is required to pay the owed Royalty and Advertising Contribution, along with a late charge. If the understatement exceeds two percent, the franchisee must also reimburse Burger King for the audit costs.