Under what circumstances will a Chicken Guy franchisee pay a royalty fee of 8% of gross sales?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
5. Royalty Fee. The following sentence is added to the end of Section 7.B.
Notwithstanding the foregoing, if: (a) beverages cannot be ordered at the Franchised Restaurant; or (b) Franchisee's point of sale system cannot allocate to Gross Sales beverages ordered at the Franchised Restaurant, Franchisee shall pay a royalty fee in the amount of 8% of the Gross Sales of the Franchised Restaurant.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, a franchisee will pay a royalty fee of 8% of gross sales under specific circumstances related to beverage sales tracking. If beverages cannot be ordered at the franchised restaurant, or if the point of sale system cannot allocate gross sales to beverages, the franchisee will be subject to the 8% royalty fee.
This condition suggests that Chicken Guy normally expects to receive a royalty based on total sales, but makes an adjustment if beverage sales cannot be accurately tracked. This could occur if a franchisee operates in a location where beverages are not a significant part of the revenue stream or if the franchisee uses a point-of-sale system that does not allow for detailed sales tracking.
For a prospective franchisee, this means it is crucial to ensure that the restaurant's point-of-sale system can accurately track beverage sales. If a franchisee cannot track beverage sales, they will be subject to a higher royalty fee. Franchisees should discuss point-of-sale requirements with Chicken Guy prior to opening their restaurant.