How does the Craters & Freighters franchise agreement define 'non-payment' in the context of the 'Repeated Non-Payment' clause?
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 royalty fees is considered a default of the agreement, which gives Craters & Freighters grounds to terminate the agreement. The royalty fee is calculated from the Adjusted Gross Sales, which is the total amount received from customers for services and products sold by the Craters & Freighters franchise. This includes sales made at or away from the premises, and payments made via cash, credit, checks, gift certificates, coupons, services, property, or other means of exchange. Adjusted Gross Sales excludes federal, state, and municipal sales or services taxes collected from customers and remitted to the appropriate taxing authority.
Craters & Freighters retains the right to collect royalty fees more frequently, such as weekly, by providing the franchisee with 30 days' prior written notice. The franchise agreement specifies that failure to pay these royalty fees constitutes a breach of contract, potentially leading to termination.
For a prospective Craters & Freighters franchisee, this means that timely payment of royalty fees is critical to maintaining the franchise agreement. Franchisees need to accurately track and remit all applicable Adjusted Gross Sales, understanding what is included and excluded from this calculation. The franchisee must also be prepared for the possibility of more frequent royalty fee collections if Craters & Freighters chooses to implement this change with a 30-day notice.