When is the Burros Fries Royalty Fee due each month?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
In addition to the Initial Franchise Fee described in Section 9 above, the following recurring or isolated payments are required to be made by the Franchisee. The Franchisee pays to us a "Royalty Fee" of six percent (6%) of total Gross Revenue for each calendar month and is to be received as we specify in writing. The Royalty Fee is due on the fifth (5th) day of each month (for the prior month) and begins immediately once the Business is open for operation, then continues for the term of this Agreement. The Royalty Fee is uniform as to all persons currently acquiring a franchise, but this may change. The fee is nonrefundable. If the Franchise Agreement is terminated, Franchisee may be required to continue such royalty payments as described in Section 24.H.
As used in this Agreement, "Gross Revenue" shall include all revenue accrued from the performance of services in, at, upon, about, through or from the Business, whether for cash or credit and regardless of collection in the case of credit, and income of every kind and nature related to the Business including but not limited to revenues generated from: the sale, delivery and performance of all Products and Services from the Business premises or off-site, insurance proceeds and/or condemnation awards for loss of sales, profits or business; and fair market value for any product or service Franchise receives in barter or exchange for its Products or Services. Gross Revenue shall not include: (i) revenues from any sales taxes or other add on taxes collected by Franchisee for transmittal to the appropriate taxing authority; (ii) gratuities paid by guests to Franchisee's employees; and (iii) the amount of refunds Franchisee in good faith gives and refunds of previous payments Franchisee made.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries' 2024 Franchise Disclosure Document, franchisees must pay a Royalty Fee of six percent (6%) of their total Gross Revenue each calendar month. This Royalty Fee is due on the fifth (5th) day of each month, covering the prior month's revenue. This payment schedule begins as soon as the Burros Fries business opens and continues for the entire term of the Franchise Agreement.
It is important to note that the Royalty Fee is generally uniform for all new Burros Fries franchisees, although the FDD indicates that this may change in the future. Franchisees need to factor this ongoing expense into their financial planning, as it directly impacts their profitability. Additionally, the agreement specifies that even if the Franchise Agreement is terminated, the franchisee may still be required to continue making royalty payments under certain conditions as outlined in Section 24.H of the agreement.
Franchisees should be aware that "Gross Revenue" includes all income from services related to the Burros Fries business, whether in cash or credit, including sales, deliveries, catering, insurance proceeds, and the fair market value of bartered services. Exclusions from Gross Revenue include sales taxes collected for tax authorities, gratuities to employees, and legitimate refunds given to customers. Understanding what constitutes Gross Revenue is crucial for accurate royalty reporting and payment.
Late payments are subject to a fee of $25, in addition to the overdue amount, plus interest at a rate of 1.5% per month (or the maximum rate allowed by law) until paid in full. This underscores the importance of timely payments to avoid additional financial burdens. Franchisees should ensure they have systems in place to accurately track and remit royalty fees to Burros Fries within the specified timeframe to maintain compliance with the Franchise Agreement.