What is the standard Royalty Rate that a C3 Wellness Spa franchisee must pay?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
Royalty Fee: Throughout the Term of this Agreement, Franchisee shall pay to Franchisor a continuing weekly non-refundable royalty fee (the "Royalty Fee") in an amount equal to 6% (the "Royalty Rate") of Franchisee's weekly Gross Sales throughout the Term of this Agreement. Without limitation to the foregoing, Franchisee agrees that if the Franchised Business is operated as a Spa Management Business that the Gross Sales shall not be limited to sales and revenue related to the Spa Facility and Management Services but, shall also include, among other things, Gross Sales related to the Spa Location Franchise including sales and revenues from the Approved Spa Products and Services.
Notwithstanding the foregoing, Franchisor and Franchisee further agree that if any federal, state, and/or local government agency, entity, law, rule and/or regulation, and/or any court order or order from any legal proceeding prohibits and/or invalidates, Franchisee's payment of royalty fees based on Gross Sales related to services and/or products related to and/or associated with services performed by and/or administered by an Authorized Care Provider and/or the Franchised Business, then Franchisor, at Franchisor's election and in Franchisor's sole discretion, may either:
- (a) increase the Royalty Rate, as applied to the permissible portion of the Gross Sales that is not otherwise restricted or prohibited, to a rate determined by Franchisor so that the net dollar amount of the Royalty Fees paid by Franchisee to Franchisor shall not be less than the Royalty Fees that Franchisor would have received had the federal, state, and/or local government agency, entity, law, rule and/or regulation not prohibited Franchisee's payment of royalty fees based on Gross Sales related to a restricted activity; or
- (b) modify the Royalty Fee to a fixed fee Royalty Fee to be charged to and paid by Franchisee to Franchise in accordance with the following schedule (the "Franchisor's Optional Fixed Fee Royalty Fee"):
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, the standard royalty fee is 6% of the franchisee's weekly gross sales. This royalty fee is paid weekly and is non-refundable. Gross sales include revenue from the Spa Facility and Management Services, as well as sales and revenues from Approved Spa Products and Services if the business is operated as a Spa Management Business.
However, there are conditions under which this standard royalty rate may be adjusted. If any government agency or legal proceeding prohibits royalty fees based on gross sales related to services performed by an Authorized Care Provider, C3 Wellness Spa has the option to either increase the royalty rate on the permissible portion of gross sales or modify the royalty fee to a fixed fee.
This means that while the standard royalty rate is 6%, a franchisee's actual royalty obligations could change based on regulatory factors or the franchisor's discretion. It is important for prospective franchisees to understand these potential adjustments and how they could impact their profitability.