What happens if a Card My Yard franchisee's royalty payments fall below the minimum?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to maintain your territorial rights within the Protected Area, you must pay us monthly minimum royalties as described more fully in Item 6 above. There is no minimum royalty requirement applicable to the first seven months of your Franchise Agreement. If your royalty payments during any applicable month fall below the minimum royalty amount for that month, you must pay us the difference immediately upon our request, and we will be entitled, at our option, to deduct the difference from your designated account via ACH/EFT. In addition to our right to demand payment of these minimum royalties, we may reduce or eliminate your rights within the Protected Area, or terminate your Franchise Agreement, upon 30 days' written notice to you.
Source: Item 12 — TERRITORY (FDD pages 43–46)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, if a franchisee's royalty payments fall below the minimum royalty amount for any applicable month, the franchisee must immediately pay Card My Yard the difference upon request. Card My Yard also has the option to deduct this difference from the franchisee's designated account via ACH/EFT. This ensures that Card My Yard receives the minimum royalty it expects from each franchise location.
In addition to demanding payment of the minimum royalties, Card My Yard has the right to reduce or eliminate the franchisee's rights within their protected area or even terminate the Franchise Agreement altogether. Card My Yard will provide a 30-day written notice before taking such actions. This clause incentivizes franchisees to meet the minimum royalty requirements to maintain their territorial rights and avoid potential termination of their agreement.
It is important to note that there is no minimum royalty requirement for the first seven months of the Franchise Agreement. This initial grace period may help new franchisees establish their business without the immediate pressure of meeting minimum royalty obligations. However, after this period, franchisees must be diligent in meeting the minimum royalty thresholds to avoid the penalties outlined in the Franchise Agreement, including potential loss of territorial rights or termination of the franchise.