Is the Royalty Fee paid by a City Publications franchisee subject to any offset, credit, or deduction?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
| sFDD2025 | Franchisee's Initials: |
|---|---|
B. Royalty Fee and Advertising Fee
Franchisee shall pay without offset, credit, or deduction of any nature to Franchisor, so long as this Agreement shall be in effect, a Royalty Fee equal to six percent (6%) of Gross Sales. For any revenue or non-revenue sale, the minimum gross sales reported will be $2500.00 and the 6% royalty paid out will be from that amount. The royalty is due and payable in two installments each quarter. Each of Franchisee's deck sales will be scheduled by the parties hereto and the first royalty installment is due three weeks before the scheduled closing date for that deck, based on a minimum of 12 cards in the deck. The second installment is due immediately after the mailing of the deck, and serves as a reconciliation payment to cover any additional amounts due, including royalties for cards printed in excess of the minimum of 12. Franchisee may also participate in Franchisor's pro
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the royalty fee franchisees pay is not subject to any reductions. The FDD states that the royalty fee is equal to six percent of gross sales and must be paid without any offset, credit, or deduction. For any revenue or non-revenue sale, the minimum gross sales reported will be $2500.00 and the 6% royalty paid out will be from that amount.
The royalty is due and payable in two installments each quarter. The first royalty installment is due three weeks before the scheduled closing date for that deck, based on a minimum of 12 cards in the deck. The second installment is due immediately after the mailing of the deck, and serves as a reconciliation payment to cover any additional amounts due, including royalties for cards printed in excess of the minimum of 12. Franchisees may also participate in City Publications' program whereby they can mail an individual advertising piece or do digital advertising, and the royalty for these programs is 3% of revenue.
This means that a City Publications franchisee cannot reduce their royalty payments based on any expenses they incur or any other reason. The royalty fee is a fixed percentage of gross sales, and it must be paid in full and on time. This is a common practice in franchising, as it ensures that the franchisor receives a consistent stream of revenue and that all franchisees are contributing equally to the system. Franchisees should factor this non-negotiable royalty fee into their financial projections and business planning.