How does the City Publications's royalty fee structure (Item 6) relate to the schedule for deck mailing?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
- OTHER FEES**
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 6% of Gross Sales for Standard card deck mailings. 3% of Gross Sales for single card mailings and digital advertising | Payable twice each calendar quarter, based on the schedule for each deck mailing | See definition of Gross Sales.2 (Section 1) In case of deck/booklet cancelation, any royalty prepaid for that deck or booklet will be applied to any mailings taking place within the next four months, up to a maximum of two mailings. After four months, the prepaid royalty is non-refundable. |
| Minimum Royalty (1) | $2,500 for each mailing that you fail to achieve each year. | Each Year | After the first calendar year of the term of your franchise, you must do a minimum of four mailings in each mailing zone granted to you, or pay us $2,500 for each zone and mailing that you fail to do. You must do the first mailing within the first nine months. |
| Renewal Fee | $1,000 | At the end of each year term | Payable to us to renew the term of the franchise at the expiration of the initial term or renewal term. (Section 5.B) |
| Graphics Services Fee | Current rates as published in the Manual or a published price list, currently $60.00 per hour. For other programs design fee of $60.00 per hour applies. | Time of service | Payable to our Affiliate for preparing printer-ready artwork using information and materials that you provide. You must obtain the advertiser’s approval of the artwork and handle all other communications with the advertiser. |
What This Means (2025 FDD)
According to City Publications's 2025 Franchise Disclosure Document, the royalty fee structure is directly tied to the schedule for each card deck mailing. For standard card deck mailings, the royalty fee is 6% of Gross Sales, while single card mailings and digital advertising incur a 3% royalty fee on Gross Sales. These royalties are payable twice each calendar quarter, based on the mailing schedule.
Specifically, the first royalty installment is due three weeks before the scheduled closing date for each deck sale, assuming a minimum of 12 cards in the deck. The second installment is due immediately after the mailing of the deck. This second payment serves as a reconciliation to cover any additional royalties owed, including those for cards printed beyond the initial minimum of 12.
This arrangement means that City Publications franchisees need to carefully manage their mailing schedules and sales figures to ensure timely and accurate royalty payments. The staggered payment schedule—part before and part after mailing—helps align royalty payments with revenue generation from the card decks. Additionally, franchisees should be aware of the minimum royalty requirement of $2,500 for each mailing they fail to achieve annually, which incentivizes consistent mailing activity.