How does Cool Binz recognize royalty income and monthly franchise fee income?
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 calendar year, at which time you must re-qualify for the discounted Royalty the following year.
For purposes of paying the Royalty, we follow the calendar month. If you transfer this Agreement to a new owner, the Royalty for all completed jobs must be paid on (a) the day of closing, or (b) on the effective termination date of this Agreement. Every month, we will scan the COOL BINZ Software or other Required Software, as applicable, (defined below) and find all jobs which have had changes in the amounts paid by Customers since the previous month, and compute Royalties on the amount of the change. We will provide an itemization of the jobs on which Royalties will be assessed, and the total of the Royalties, in the form, format, and medium we decide in our sole discretion. On the tenth (10th) of each month (or other date that we designate), we will initiate a transfer of funds between our bank accounts for the amount indicated in the
itemization from the bank account designated by you in the electronic funds transfer ("EFT") agreement attached to this Agreement as Exhibit E. We may specify different due dates periodically in our discretion.
You must sign and deliver to us, before the COOL BINZ Business opens, the documents we require to authorize us to automatically debit your business checking account each month for the Royalty due on Gross Sales from the preceding month, including the EFT Agreement. You also must promptly and regularly report a correct statement of all of your Gross Sales in the COOL BINZ Software or another software program within the Required Software that we des
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, franchisees must pay a monthly royalty, which Cool Binz calculates and collects via electronic funds transfer. Cool Binz scans the COOL BINZ Software each month to identify changes in customer payments since the previous month and computes royalties on the amount of the change. Franchisees must authorize Cool Binz to automatically debit their business checking account each month for the royalty due on gross sales from the preceding month. Franchisees also must report a correct statement of all gross sales in the COOL BINZ Software.
The royalty is 9% of gross sales, but beginning in month thirteen of operations, if the percentage royalty is less than $1,000, the franchisee must pay a minimum monthly royalty of $1,000. Once gross sales exceed $500,000 in a calendar year, the royalty decreases to 8% of gross sales for the remainder of that year and the entire following calendar year. If gross sales fall below $500,000 in the subsequent year, the royalty reverts to 9%. Cool Binz reserves the right to reset the royalty to 9% if a franchisee is not in compliance with the Franchise Agreement.
For Cool Binz franchisees, this means that royalty payments are a significant and ongoing expense tied directly to revenue. The minimum royalty and tiered percentage structure incentivize higher sales volumes. Franchisees need to maintain accurate records in the COOL BINZ Software and ensure sufficient funds are available for the monthly EFT to avoid late payment fees. The potential for royalty rates to fluctuate based on sales performance and compliance adds complexity to financial planning.