How often is the gross revenue used to calculate the royalty fee for a Devon Creek franchise?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
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| Gross Revenue per year | Royalty Fee | |---------------------------|---------------------------------------------| | $0 - $1,000,000 | 6% of the Gross Revenue generated weekly by your Franchise | | $1,000,000 - $1,500,000 | 5% of the Gross Revenue generated weekly by your Franchise | | $1,500,000 + | 4% of the Gross Revenue generated weekly by your Franchise | Or
| Months since beginning operations | Minimum Annual Royalty |
|---|---|
| 0 - 12 | $6,000 annually |
| 13 – 24 | $10,000 annually |
| 25 – 36 | $14,500 annually |
| 37 – 48 | $21,500 annually |
| 48-60 | $28,750annually |
"Gross Revenue" includes all sales of every kind and nature at or from your Devon Creek Franchise location or made pursuant to the rights granted to you by the Franchise Agreement. "Gross Revenue" does not include (i) receipts from any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, or (iii) properly documented promotional discounts (i.e., coupons).
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the royalty fee is calculated weekly based on the gross revenue generated by the franchise. Franchisees are required to furnish Devon Creek with a report showing the gross revenue from the prior week every Wednesday.
The percentage of gross revenue paid as a royalty varies based on the total gross revenue per year. If the gross revenue is between $0 and $1,000,000, the royalty fee is 6% of the weekly gross revenue. For gross revenue between $1,000,000 and $1,500,000, the royalty fee is 5% of the weekly gross revenue. If the gross revenue exceeds $1,500,000, the royalty fee is 4% of the weekly gross revenue.
Alternatively, the royalty fee can also be determined based on the number of months since the franchise began operations. For the first 12 months, the royalty fee is 4% of the weekly gross revenue. In months 13 through 24, the royalty fee increases to 5% of the weekly gross revenue. After 24 months, the royalty fee is 6% of the weekly gross revenue. Franchisees must also maintain minimum Gross Revenue that is five percent (5%) above your prior years Gross Revenue.
Franchisees must submit a Gross Revenue Report to Devon Creek every Wednesday for the prior week. Payment of the royalty fee is due at the same time as the Gross Revenue Report is submitted. Devon Creek may also request that franchisees allow them to automatically deduct the royalty fee from their business bank accounts via electronic funds transfers.