What is the minimum monthly royalty fee for Craters & Freighters in year 6?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
At the end of year 3, we will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement and you will be provided with an amendment to your Franchise Agreement. We will base our decision on population, demographic factors, economic factors, competition, market penetration, the growth rate of other Craters & Freighters Franchised Businesses, and other relevant factors. If you are entering into a Successor Franchise Agreement, we will determine the Minimum Performance Standards and Minimum Monthly Royalty for your successor term.
Your failure or refusal to satisfy your Minimum Performance Standards may result in the reduction or modification of your Territory. These Minimum Performance Standards are not, and should not be considered, financial performance representations for your Franchised Business.
Source: Item 12 — TERRITORY (FDD pages 29–32)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, the minimum monthly royalty fee for year 6 is not explicitly stated. The FDD indicates that Craters & Freighters will determine the Minimum Performance Standards and Minimum Monthly Royalty Fees for years 4-15 of the Franchise Agreement at the end of year 3. This determination is based on factors such as population, demographics, economic conditions, competition, market penetration, and the growth rate of other Craters & Freighters franchises.
This means that the royalty fees for years 4 through 15 are not predetermined at the outset of the franchise agreement. Instead, they are subject to review and adjustment by Craters & Freighters based on the performance of the franchise and prevailing market conditions. Franchisees will receive an amendment to their Franchise Agreement reflecting these updated standards and fees.
For prospective franchisees, this implies that the royalty fees beyond year 3 are uncertain and could change. While this provides Craters & Freighters with the flexibility to adjust fees based on market dynamics, it also introduces an element of unpredictability for franchisees. It would be prudent for potential franchisees to inquire about the typical range of royalty fee adjustments and the factors that most heavily influence these changes.
The FDD includes a table showing the Minimum Performance Standard and Minimum Monthly Royalty Fee for the first three years of operation. In year 1, the Minimum Performance Standard is $200,000 and the Minimum Monthly Royalty Fee is $0. In year 2, the Minimum Performance Standard is $400,000 and the Minimum Monthly Royalty Fee is $1,667. In year 3, the Minimum Performance Standard is $510,000 and the Minimum Monthly Royalty Fee is $2,125. These figures provide some context for the initial years, but the absence of specific figures for year 6 underscores the importance of understanding how future royalty fees will be determined.