What is the royalty fee based on for a Closet Storage Concepts franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
livery of this Agreement by Franchisor. Except as herein expressly provided, said Initial Franchise Fee shall not be refunded, in whole or in part, upon any termination of this Agreement nor under any other circumstances whatsoever.
3.3 Royalty Fee.
3.3.1 Royalty Based on Gross Revenue. Franchisee agrees to pay to Franchisor in accordance with Section 3.3.3, during the term of this A
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Closet Storage Concepts franchisees must pay a royalty fee. This royalty is calculated as 5% of the franchise's weekly gross revenues. In addition to the percentage, there is a minimum royalty fee of $125.00 per week.
The royalty fee is designed to compensate Closet Storage Concepts for the ongoing use of its brand name, system, and support. Gross revenues for all locations within a single territory are combined when calculating the royalty fee. This means that if a franchisee operates multiple Closet Storage Concepts locations within the same territory, the total revenue from all locations is used to determine the 5% royalty and whether the minimum of $125.00 is met.
For a prospective Closet Storage Concepts franchisee, this means that the royalty payment will fluctuate based on sales performance. During slower weeks, the minimum royalty fee ensures that Closet Storage Concepts still receives a base level of compensation. Franchisees should factor this ongoing royalty expense into their financial projections and business planning. Understanding how gross revenues are calculated and reported is crucial for accurate royalty payments and maintaining a positive relationship with the franchisor.