How are continuing royalty fees calculated for a Clean Your Dirty Face franchise?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalties, which include a franchisee contribution to marketing funds, are calculated as a percentage of franchise monthly gross sales, as defined in the franchise agreement, over the term of the franchise agreement, and are recorded monthly as revenue when earned. Under the franchise agreements, the marketing portion of the contributions paid by franchisees must be spent on advertising, marketing and related activities.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, continuing royalty fees are calculated as a percentage of the franchise's monthly gross sales. These royalties, which also include contributions to marketing funds, are defined within the franchise agreement. The royalty fees are recorded as revenue monthly as they are earned throughout the term of the franchise agreement.
For a prospective Clean Your Dirty Face franchisee, this means that a portion of their monthly revenue will be paid to the franchisor as a royalty. The exact percentage will be specified in the franchise agreement. Additionally, a portion of the royalty payment is earmarked for advertising, marketing, and related activities, which Clean Your Dirty Face must spend accordingly.
Understanding how gross sales are defined in the franchise agreement is crucial. Franchisees should clarify what is included and excluded from gross sales to accurately calculate royalty payments. Furthermore, franchisees should ensure they understand how the marketing portion of their royalty contributions is being used to support the Clean Your Dirty Face brand.