What is the estimated royalty expenditure shown for Desi District affiliates in Item 19?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
| Company Owned Location | Gross Sales | Type of Franchise |
|---|---|---|
| Desi District LLC | $7,526,994.07 | Eatery & Market |
| Estimated Royalty Fees | $301,079.76 | |
| Premier Meat Bazaar 423 Inc | $2,050,736.60 | Eatery |
| Estimated Royalty Fees | $82,029.46 | |
| Desi District Plano | $545,663.83 | Eatery |
| Estimated Royalty Fees | $21,826.55 | |
| Premier Eldorado Inc | $6,851,280.85 | Eatery & Market |
| Estimated Royalty Fees | $274,051.23 | |
| Desi Eats LLC | $2,567,600.44 | Eatery & Market |
| Estimated Royalty Fees | $102,704.02 |
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- Our Affiliates do not pay royalties or marketing fees to us; however, we have shown the estimated expenditures (4% Royalty) for each Affiliate had they incurred those expenses.
- 5. Some outlets have sold and earned this amount. Your individual results may differ. There is no assurance that you'll sell or earn as much.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–49)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Item 19 includes financial performance representations based on company-owned outlets from January 1, 2023, through December 31, 2023. These locations are owned by affiliate entities. While these affiliates do not actually pay royalties or marketing fees, the document provides estimated royalty expenditures that would have been incurred at a 4% royalty rate. This gives potential franchisees an idea of what their royalty obligations might look like based on the gross sales of existing Desi District locations.
The estimated royalty fees vary depending on the location and its gross sales. For example, Desi District LLC, an Eatery & Market location with gross sales of $7,526,994.07, has an estimated royalty fee of $301,079.76. Premier Meat Bazaar 423 Inc, an Eatery with gross sales of $2,050,736.60, has estimated royalty fees of $82,029.46. Desi District Plano, an Eatery with gross sales of $545,663.83, has estimated royalty fees of $21,826.55. Premier Eldorado Inc, another Eatery & Market location with gross sales of $6,851,280.85, has estimated royalty fees of $274,051.23. Lastly, Desi Eats LLC, an Eatery & Market location with gross sales of $2,567,600.44, has estimated royalty fees of $102,704.02.
It is important to note that these are just estimates based on the performance of company-owned outlets and are not a guarantee of future performance. The FDD explicitly states that individual results may differ, and there is no assurance that a franchisee will achieve similar sales or earnings. The document also clarifies that these figures do not include any operating expenses, such as rent, cost of goods sold, labor, insurance, or advertising, which would need to be accounted for to determine net income. Prospective franchisees should consider these factors and conduct their own due diligence to assess the potential financial performance of a Desi District franchise.