factual

When does the recurring fee obligation begin for a City Wide franchise?

Q: When does the recurring fee obligation begin for a City Wide franchise?

- 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)

City_Wide Franchise · 2025 FDD

Answer 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, recurring fees begin accruing when the Franchised Business opens to the public. Specifically, the franchisee must pay City Wide recurring fees starting on the first day the business is open and continuing throughout the term of the agreement. These recurring fees include a monthly royalty fee, which is the greater of 5% of gross sales (including National Accounts) or the minimum royalty fee.

This means that as soon as a City Wide franchise commences operations and starts generating revenue, the franchisee's obligation to pay recurring fees to City Wide begins. This obligation continues for the entire length of the franchise agreement. The royalty fee is calculated monthly, based on a percentage of gross sales or a minimum amount, whichever is higher, ensuring City Wide receives a consistent income stream from the franchise.

For a prospective City Wide franchisee, this highlights the importance of carefully planning the launch of their business. They need to be prepared to start paying recurring fees from day one of operation. Understanding the factors that influence gross sales and managing them effectively will be crucial in ensuring that the royalty fees are manageable and do not negatively impact the profitability of the franchise. Franchisees should also be aware of the minimum royalty fee and factor that into their financial projections to ensure they can meet this obligation even during slower periods.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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