When are estimated Gross Revenues reconciled by Closet Storage Concepts?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Such reports will reconcile the monthly Gross Revenue of Franchisee with Franchisee's weekly Gross Revenue and royalty payments.
- 3.3.6 Annual Revenue Report.
Within sixty (60) days after the close of Franchisee's fiscal year, Franchisee shall furnish a statement, on forms provided by Franchisor, containing all of the information requested on such forms, certified to by Franchisee and signed by Franchisee's accountant, showing the total net revenue for said preceding fiscal year, as finally adjusted and reconciled after the closing and review of Franchisee's books and records for such fiscal year.
If such statement discloses any underpayment of royalties for such fiscal year, Franchisee shall pay to Franchisor, at the time of submitting such statement, the amount of any such underpayment.
Any overpayment shall be credited to Franchisee's account, if confirmed by Franchisor and/or Franchisor's accountant.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, there are two reconciliations of gross revenues. First, Closet Storage Concepts provides franchisees with reports that reconcile monthly gross revenue with weekly gross revenue and royalty payments. Second, within 60 days after the close of the franchisee's fiscal year, the franchisee must furnish a statement, certified by the franchisee and signed by the franchisee's accountant, showing the total net revenue for the preceding fiscal year, as finally adjusted and reconciled after the closing and review of the franchisee's books and records for such fiscal year.
If the annual statement discloses any underpayment of royalties for such fiscal year, the franchisee must pay the amount of any underpayment to Closet Storage Concepts when submitting the statement. Any overpayment will be credited to the franchisee's account, if confirmed by Closet Storage Concepts and/or its accountant.
This reconciliation process is typical in franchising, ensuring accurate royalty payments based on actual revenue. Franchisees should maintain meticulous records and work closely with their accountants to ensure accurate reporting and avoid potential underpayment penalties. The monthly reconciliation helps to catch any discrepancies early, while the annual report provides a comprehensive overview.