When is the royalty fee due for a Desi District franchise?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 4% of your gross | Weekly, on | See Note 1 |
| sales | Tuesday | and Note 2. |
Notes
-
- "Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
-
- We currently require you to pay royalty fees and other amounts due to us by preauthorized bank draft. However, we can require an alternative payment method.
Source: Item 6 — OTHER FEES (FDD pages 16–20)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the royalty fee is 4% of your gross sales and is due weekly, on Tuesday. The FDD also notes that Desi District currently requires franchisees to pay royalty fees and other amounts due via preauthorized bank draft, but they can require an alternative payment method. Gross sales are defined in the franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
Franchisees should be aware that consistently paying royalties on time is critical for maintaining a good relationship with Desi District and avoiding potential penalties. The franchisor also has the right to change the payment method, so franchisees need to stay informed of any changes to payment procedures.
The weekly royalty payment schedule is fairly common in the franchise industry, as it allows franchisors to maintain a steady cash flow and closely monitor the performance of their franchisees. Franchisees should factor this weekly obligation into their financial planning and ensure they have sufficient cash flow to meet this requirement.