What is the basis for calculating the Royalty fee for a Closet Storage Concepts franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 5% of Gross | Payable on each | (See Note 1) |
| Revenues | Monday via ACH for | ||
| subject to a | the week ending the | ||
| minimum of | immediately prior | ||
| $125 per week | Saturday. |
Note 1: "Gross Revenues" are defined in the Franchise Agreement to include the total gross revenue derived from the operation of the Franchised Business whether from sales for cash or credit, including sales of both franchise products and services, and including installation charges, exclusive of all sales taxes, use taxes, gross receipts taxes and other similar taxes added to the sales price and collected from the customer, and less any bona fide refunds, rebates, and discounts.
Gross Revenues are aggregated for multiple locations you operate within one granted Territory. If you fail to submit any weekly revenue report on a timely basis, we may estimate Gross Revenues and withdraw from your operating account the amounts estimated to be due which will be reconciled when the required reports are received.
Note 3: You must maintain accurate business records, reports, accounts, books and data relating
to the operation of your Franchised Business. We have the right to inspect and/or audit your business records during normal business hours. If any audit reveals that you have understated Gross Revenues by 2% or more, or if you have failed to submit reports and/or remittances for any 2 reporting periods or you do not make them available when requested, you must pay the reasonable cost of the audit, including the cost of auditors and attorneys, together with the understated amount, and amounts due for royalty and other fees as a result of the understated Gross Revenues, including interest from the date when the Gross Revenues should have been reported.
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the royalty fee is calculated as 5% of Gross Revenues, with a minimum of $125 per week. This fee is payable each Monday via ACH for the week ending the immediately prior Saturday. Gross Revenues include the total gross revenue derived from the operation of the Franchised Business, whether from sales for cash or credit, including sales of both franchise products and services, and including installation charges, exclusive of all sales taxes, use taxes, gross receipts taxes and other similar taxes added to the sales price and collected from the customer, and less any bona fide refunds, rebates, and discounts. Gross Revenues are aggregated for multiple locations you operate within one granted Territory.
For a prospective Closet Storage Concepts franchisee, this means that they will need to remit 5% of their weekly gross revenue to Closet Storage Concepts as a royalty fee. It is important to note the minimum royalty fee of $125 per week, which means that even if 5% of gross revenues is less than $125, the franchisee will still need to pay $125. Franchisees must accurately track and report their gross revenues, as Closet Storage Concepts has the right to audit business records.
If a Closet Storage Concepts franchisee fails to submit weekly revenue reports on time, Closet Storage Concepts may estimate Gross Revenues and withdraw the estimated amount due from the franchisee's operating account. This amount will be reconciled once the required reports are received. Additionally, if an audit reveals that the franchisee has understated Gross Revenues by 2% or more, the franchisee will be responsible for covering the cost of the audit, including auditor and attorney fees, in addition to paying the understated amount, royalty fees, other fees, and interest.