What is the 'Royalty Fee' for a Devon Creek franchise, as defined in the Franchise Agreement?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.1.2 Royalty Fee.
Franchisee agrees to pay Franchisor, monthly throughout the Term, a royalty fee as set forth in Attachment 1 to the Franchise Agreement (the "Royalty Fee").
If Franchisee fails to achieve the minimum Gross Revenue as defined in Attachment 1 to the Franchise Agreement, Franchisor may collect from Franchisee a Royalty equal to what Franchisee would have paid had Franchisee achieved the minimum gross revenue ("Minimum Gross Revenue").
The term "Gross Revenue" includes all revenues and income from any source derived or received by Franchisee from, through, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited, any and all other revenues received using Franchisor's trademarks, methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise.
Gross Revenues also include all proceeds from any business interruption insurance.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to the 2024 Devon Creek Franchise Disclosure Document, the Royalty Fee is paid monthly throughout the term of the agreement, as detailed in Attachment 1 of the Franchise Agreement. If a franchisee fails to achieve the minimum Gross Revenue, as defined in Attachment 1, Devon Creek may collect a royalty equal to what the franchisee would have paid had they achieved the minimum gross revenue. This is referred to as the "Minimum Gross Revenue".
The term "Gross Revenue" includes all revenues and income from any source derived or received by the franchisee from the operation of the franchised business. This includes revenues received using Devon Creek's trademarks, methods, operations, and/or trade secrets, whether received in cash, services, or any other form, and whether payment is actually received or not. Gross Revenues also include all proceeds from any business interruption insurance.
Prospective franchisees should carefully review Attachment 1 of the Franchise Agreement to fully understand how the Royalty Fee is calculated, what constitutes minimum Gross Revenue, and the implications of not meeting that minimum. Understanding these details is crucial for assessing the financial obligations and potential profitability of a Devon Creek franchise.