What is the Royalty Rate for Out of Territory Customers for a Casiola franchise?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Note 2: Royalty Fees – You must pay to us a continuing royalty fee (the "Royalty Fee"). The continuing Royalty Fee is payable and due instantly on a per transaction basis or as otherwise directed by us and is equal to 4.9% (the "Royalty Rate") of all Gross Rental Revenues+ (defined below). The Royalty Rate is 8% of all Gross Rental Revenues+ for Out of Territory Customers. In most, if not all instances, as directed by us, the Gross Rental Revenues+ of your Casiola Business will be received directly by us or our affiliate. We are authorized to pre-deduct and pay to ourselves all Royalty Fees and other fees due from you to us from the Gross Rental Revenues+ of your Casiola Business. If any federal, state or local tax other than an income tax is imposed on the Royalty Fee which we cannot directly and, dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective royalty fees received by us is not less than 4.9% of your Gross Rental Revenues+.
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, franchisees must pay a continuing royalty fee. The standard royalty rate is 4.9% of all Gross Rental Revenues+. However, for Out of Territory Customers, the royalty rate is higher, set at 8% of all Gross Rental Revenues+.
This means that if a Casiola franchisee generates revenue from customers outside their designated territory, a larger percentage of that revenue will be owed to Casiola as a royalty. This difference in royalty rates could impact a franchisee's business strategy, potentially discouraging them from actively pursuing customers outside of their territory.
It is important to note that Casiola or its affiliate may directly receive the Gross Rental Revenues+ and pre-deduct all Royalty Fees and other fees owed by the franchisee. Additionally, if any taxes are imposed on the Royalty Fee that Casiola cannot offset, the franchisee must compensate Casiola to ensure the net royalty received remains at least 4.9% of Gross Rental Revenues+.