For a City Wide franchise, what royalty fee is paid during the first 6 months of operation?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.7 Recurring Fees. Beginning on the first day that the Franchised Business is open for business to the public as determined by CITY WIDE and continuing through the Term of this Agreement, Franchisee must pay CITY WIDE the following recurring fees without offset, credit or deduction of any nature:
- 3.7.1 Royalty Fee. A monthly royalty fee ("Royalty Fee") equal to the greater of five percent (5%) of the Gross Sales (including National Accounts) or the minimum Royalty Fee ("Minimum Royalty Fee"), as outlined in the appropriate chart below:
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees must pay a monthly royalty fee. This Royalty Fee is the greater of 5% of Gross Sales (including National Accounts) or the Minimum Royalty Fee. The FDD states that the Minimum Royalty Fee is outlined in the appropriate chart, but does not specify the amount to be paid during the first 6 months of operation.
In addition to the royalty fee, franchisees must also pay a marketing fee of up to 1% of monthly Gross Sales. This fee goes into the City Wide Marketing Fund and is used for research and development, media placement, marketing materials, and the National Business Development Program. Franchisees are also required to spend at least $1,200 annually on their own local advertising and promotion.
Prospective franchisees should carefully review the Minimum Royalty Fee charts referenced in Section 3.7.1 of the FDD to understand the specific royalty obligations during the initial months of operation. It would be prudent to ask the franchisor directly about the typical royalty fees paid by new franchisees during their first six months to better understand the potential financial obligations.