What is the definition of 'Royalty' in the Cool Binz franchise agreement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
deemed fully earned upon payment and non-refundable under any circumstances.
C. ROYALTY.
You shall pay us a monthly royalty (the "Royalty") equal to nine percent (9%) of Gross Sales, as defined below in Section 2.D. Beginning in month thirteen (13) of operations, if the percentage Royalty is less than $1,000, then you will be required to pay the minimum monthly royalty of $1,000 instead. You shall pay us a Royalty equal to nine percent (9%) of your Gross Sales until your Gross Sales exceed $500,000 in a calendar year. Once you exceed $500,000 in Gross Sales in a calendar year, your Royalty will decrease to eight percent (8%) of Gross Sales for the remainder of the calendar year, plus the entire following calendar year. If you fail to achieve over $500,000 in Gross Sales in the following calendar year, your Royalty will revert to 9%. If for any reason you are not in compliance with the Franchise Agreement, we reserve the right to reset the Royalty to nine percent (9%) for the remainder of the
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, the Royalty is defined as a monthly fee franchisees pay to Cool Binz, calculated as a percentage of Gross Sales. Initially, this Royalty is set at nine percent (9%) of Gross Sales. However, beginning in the thirteenth month of operations, Cool Binz franchisees are required to pay a minimum monthly royalty of $1,000 if the percentage Royalty calculation falls below this amount.
The Royalty structure includes a provision for a reduced rate once a Cool Binz franchisee's Gross Sales exceed $500,000 in a calendar year. Upon reaching this threshold, the Royalty decreases to eight percent (8%) of Gross Sales for the remainder of that calendar year and continues at this reduced rate for the entire following calendar year. If the franchisee fails to surpass $500,000 in Gross Sales in the subsequent year, the Royalty reverts to the original nine percent (9%).
Cool Binz retains the right to reset the Royalty to nine percent (9%) if a franchisee is not in compliance with the Franchise Agreement. In such cases, the Royalty remains at nine percent (9%) for the remainder of the calendar year, and the franchisee must re-qualify for the discounted Royalty in the following year. This provision underscores the importance of adhering to the Franchise Agreement to maintain the reduced Royalty rate.