How is the weekly Royalty Fee calculated for a Chocolate Fish Coffee franchise?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall pay such amount plus a 10% administrative charge to Chocolate Fish Franchising within 15 days after invoice by Chocolate Fish Franchising accompanied by reasonable documentation.
4.7 Payment Terms.
- (a) Method of Payment. Franchisee shall pay the Royalty Fee, Brand Fund Contribution, and any other amounts owed to Chocolate Fish Franchising by pre-authorized bank draft or in such other manner as Chocolate Fish Franchising may require. Franchisee shall comply with Chocolate Fish Franchising's payment instructions.
- (b) Calculation of Fees. Franchisee shall report weekly Gross Sales to Chocolate Fish Franchising by Monday of the following week. If Franchisee fails to report weekly Gross Sales, then Chocolate Fish Franchising may withdraw estimated Royalty Fees and Brand Fund Contributions equal to 125% of the last Gross Sales reported to Chocolate Fish Franchising, and the parties will true-up the actual fees after Franchisee reports Gross Sales. Franchisee acknowledges that Chocolate Fish Franchising has the right to remotely access Franchisee's pointof-sale system to calculate Gross Sales.
- (c) Late Fees and Interest. If Franchisee does not make a payment on time, Franchisee shall pay a $100 "late fee" plus interest on the unpaid amount at a rate equal to 18% per year (or, if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law).
- (d) Insufficient Funds. Chocolate Fish Franchising may charge $30 for any payment returned for insufficient funds (or, if such amount exceeds the maximum allowed by law, then the fee allowed by law).
- (e) Costs of Collection. Franchisee shall repay any costs incurred by Chocolate Fish Franchising (including reasonable attorney fees) in attempting to collect payments owed by Franchisee.
- (f) Application. Chocolate Fish Franchising may apply any payment received from Franchisee to any obligation and in any order as Chocolate Fish Franchising may determine, regardless of any designation by Franchisee.
- (g) Obligations Independent; No Set-Off. The obligations of Franchisee to pay to Chocolate Fish Franchising any fees or amounts desc
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
Based on the 2024 Chocolate Fish Coffee Franchise Disclosure Document, franchisees are required to pay a weekly Royalty Fee. While the document outlines the payment terms, including the method of payment, consequences for late payments, and insufficient funds, it does not explicitly state the percentage or specific calculation used to determine the weekly Royalty Fee.
However, the FDD does mention that franchisees must report their weekly Gross Sales to Chocolate Fish Franchising by Monday of the following week. If a franchisee fails to report their weekly Gross Sales, Chocolate Fish Franchising has the right to withdraw estimated Royalty Fees and Brand Fund Contributions equal to 125% of the last Gross Sales reported. The actual fees will be reconciled after the franchisee reports their Gross Sales. Chocolate Fish Franchising also has the right to remotely access the franchisee's point-of-sale system to calculate Gross Sales.
Prospective franchisees should inquire directly with Chocolate Fish Coffee about the specific percentage used to calculate the weekly Royalty Fee, as well as any potential variations or conditions that may affect the fee structure. Understanding the exact calculation is crucial for accurately forecasting expenses and assessing the financial viability of the franchise.