When do Royalty Fees start for a Cr3 American Exteriors franchise?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE (Note 2) | REMARKS |
|---|---|---|---|
| (Note 1) | |||
| Royalty Fee | The greater of (i) 6.0% of monthly Gross Revenue collected (the “Royalty Fee”) or (ii) $2,000.00 (the “Minimum Royalty Fee”). (Note 3) | By the 10th day of the month. | Royalty Fee’s start the first month in operation; however, the Minimum Monthly Royalty Fee, if applicable, will not begin until the 7th month of operation. Payments are due on |
Source: Item 6 — OTHER FEES (FDD pages 18–20)
What This Means (2025 FDD)
According to Cr3 American Exteriors's 2025 Franchise Disclosure Document, the Royalty Fee, which is the greater of 6.0% of monthly Gross Revenue collected or $2,000.00, starts the first month of operation. However, the Minimum Monthly Royalty Fee of $2,000.00, if applicable, will not begin until the 7th month of operation. Payments are due by the 10th day of the month. Gross Revenue includes all revenues derived directly or indirectly from the Franchised Business, excluding sales and use taxes.
In practical terms, a new Cr3 American Exteriors franchisee will need to start paying the royalty fee based on 6% of gross revenue from the very first month they are in operation. This means that even in the initial months when the business is ramping up, a percentage of all revenue generated will be due as a royalty. However, the minimum royalty payment of $2,000 does not kick in until the seventh month. This provides a grace period where the franchisee only pays the percentage-based royalty if it is less than $2,000.
This structure benefits both the franchisor and the franchisee. The franchisor receives a steady income stream from the start, while the franchisee gets some breathing room in the early months before the minimum royalty applies. It is important for prospective franchisees to factor in this ongoing royalty obligation when projecting their startup costs and monthly expenses. Accurately forecasting revenue will be crucial to understanding the actual royalty payments due each month, especially after the first six months when the minimum royalty fee could apply.
Furthermore, all royalties on transactions will be paid at the time of deal closing through an escrow attorney. Cr3 American Exteriors requires franchisees to sign and deliver bank documents to permit them to debit the franchisee's bank account via ACH Electronic Transfer for all fees and payments due. Franchisees must notify Cr3 American Exteriors within one day if they change their bank account or transfer their account to a different bank, and sign and deliver new documents to permit Cr3 American Exteriors to debit the new bank account within three days.