What additional Royalty Fee must a City Wide franchisee pay to City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
At all times after Franchisee execute this Agreement, Franchisee must pay CITY WIDE as an additional Royalty Fee a sum equal to any excise, sales, or privilege tax that any government or governmental agency levies or imposes on CITY WIDE on account of this Agreement or any consideration or fee Franchisee pay under this Agreement (but the taxes contemplated by the preceding clause do not include any income or corporate franchise tax imposed on CITY WIDE).
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees must pay an additional Royalty Fee to City Wide. This additional fee is equivalent to the sum of any excise, sales, or privilege tax that a government or governmental agency levies or imposes on City Wide due to the franchise agreement or any payments made under it. However, this does not include any income or corporate franchise tax imposed on City Wide.
In practical terms, this means that if any new taxes or fees are imposed on City Wide specifically because of its franchising operations or the fees it receives from franchisees, the franchisee will be responsible for covering those costs. This is in addition to the standard royalty fees outlined elsewhere in the FDD, which are a percentage of gross sales.
This clause protects City Wide from bearing the burden of unexpected taxes or fees levied by governmental entities. However, it also introduces a degree of uncertainty for the franchisee, as the amount of this additional royalty fee could fluctuate depending on changes in tax laws or regulations. Prospective franchisees should consider this potential cost when evaluating the overall financial obligations of the franchise agreement.