What constitutes a default under the Craters & Freighters Franchise Agreement related to Royalty Fees?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor reserves the right to collect the Royalty Fee more frequently (e.g., weekly) upon thirty (30) days' prior written notice to Franchisee. Non-payment of any Royalty Fees will be deemed a default under this Agreement and will provide Franchisor a basis to terminate this Agreement. "Adjusted Gross Sales" means the total of all amounts received from customers for services performed and products sold from, at or in connection with Franchisee's Franchised Business, or arising out of the operation or conduct of business by Franchisee's Franchised Business, including sales made at or away from the Premises, whether such amounts are paid by cash, credit, checks, gift certificates, coupons, services, property or other means of exchange, but excluding all federal, state or municipal sales or services taxes collected from customers and paid to the appropriate taxing authority.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, non-payment of any Royalty Fees constitutes a default under the Franchise Agreement. This gives Craters & Freighters the right to terminate the agreement.
Royalty Fees are based on Adjusted Gross Sales, which includes all revenue from services and products sold by the franchisee's business, whether paid in cash, credit, or other forms of exchange. However, sales taxes collected from customers and remitted to the appropriate taxing authority are excluded from Adjusted Gross Sales.
Craters & Freighters retains the right to collect Royalty Fees more frequently, such as weekly, by providing the franchisee with 30 days' prior written notice. Franchisees should ensure they understand the terms for calculating and paying Royalty Fees to avoid default and potential termination of their franchise agreement.