What happens if a Dermani Medspa franchisee fails to make royalty payments on time?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
ies to identify which revenues are, and are not, part of Gross Revenue.
We require that you must pay your royalties and System Marketing Fund contributions on a weekly basis. For this purpose, the term "Week" means the period starting with the beginning of business on Monday and concluding at the close of business on the following Sunday (or, if the dermani MEDSPA® is not open on a Sunday, the immediately preceding business day), or any other period of time that we may designate. All payments must be made by electronic funds transfer ("EFT"), and you must establish an appropriate EFT and sign the EFT authorization forms that we specify. Currently, you must send us a report of Gross Revenue and other sales and operating data by close of business on Tuesday, for the Week ending the immediately preceding Sunday. We will draft from your designated bank account, per our EFT process on Wednesday. You must submit or deliver to us any and all reports, statements and/or other information on a timely basis, which may include electronically polled data that we obtain from your point-of-sale system. We may draft funds from your account based on the written or electronically delivered or polled reports. If you fail to make one or more payments on time, we may require that future payments be made by certified, bank, or cashier's check, or another form of payment that we specify.
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- We may require you to contribute an amount equal to up to 2% of the Gross Revenue of the Franchised Business (the "System Marketing Fee") toward the System Marketing Fund (the "System Marketing Fund"). The System Marketing Fee must be paid by you in the same manner as the Royalty Fee. Currently, you are required to contribute 0.25% of your Gross Revenue to the System Marketing Fund.
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- You are required to pay our then-current social media/technology fee ("Social Media/Technology Fee").
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, royalty payments are due weekly, calculated on the Gross Revenue for the prior week, and are expected to be paid on or before Wednesday of each week. The standard royalty fee is 5% of Gross Revenue. If a Dermani Medspa franchisee fails to make royalty payments on time, the franchisor may require that future payments be made via certified, bank, or cashier's check, or another payment form that they specify.
Additionally, if a Dermani Medspa franchisee underpays their royalties by 2% or more, they will be subject to an audit and will be responsible for covering the reasonable accounting and legal costs associated with the audit. The franchisee will also be required to pay interest and late fees on the underpayment.
Beyond these immediate financial and procedural consequences, consistent failure to pay royalties could lead to further action from Dermani Medspa, potentially including termination of the franchise agreement. Franchisees should ensure they have sufficient financial resources and accounting practices in place to meet the royalty obligations outlined in the Franchise Agreement.