When are Royalty Fees due for a Dickeys Barbecue Pit franchise?
Dickeys_Barbecue_Pit Franchise · 2024 FDDAnswer from 2024 FDD Document
FEE**. You shall pay Dickey's an initial franchise fee ("Franchise Fee") in an amount equal to Twenty Thousand Dollars ($20,000) upon the execution of this Agreement. Such initial Franchise Fee shall be nonrefundable. If a Development Agreement has been executed, the initial Franchise Fee will be payable according to its terms.
- 4.2 ROYALTY FEES. You shall pay a continuing nonrefundable "Royalty Fee" throughout the term of this Agreement, equal to six percent (6%) of the Net Sales (as defined in Article 4.6) of your Restaurant, which shall be due and payable and shall be electronically drafted on your Bank Account (as defined in Article 4.4 below) on or before the Monday following the calendar week to which such payments relate. If the date on which such payments would otherwise be due is not a business day, then payment shall be due and drafted upon on the next business day. You shall not be entitled to withhold any payments due to Dickey's on grounds of alleged non-performance by Dickey's under this Agreement. The calendar week for which Royalty Fees are due is sometimes referred to as the "Sales Period."
- 4.3 SALES REPORT. You shall, during the term of this Agreement, on or before the third (3rd) day of each calendar month, submit to Dickey's a report (the "Monthly Sales Report"), prepared and approved by you setting forth (i) your Restaurant's Net Sales for each Sales Period during the previous calendar month; (ii) the amount of the Royalty Fee due for each Sales Period during the prior calendar month; (iii) the Marketing Fund contribution due for each Sales Period during the prior calendar month; and, (iv) an income statement and other reports for your Restaurant. In addition, you shall submit to Dickey's on a daily or weekly basis, in such manner as Dickey's may require, a report detailing your Restaurant's Net Sales for the current Sales Period prior to the time that your Royalty Fees and Marketing Fund contribution for such Sales Period is due and payable.
- 4.4 ACH TRANSFERS. All payments of Royalty Fees, Marketing Fund contributions, customer refund reimbursements, and any other sums owed to Dickey's hereunder shall be made by ACH electronic transfer drawn upon your account at your bank on a weekly or monthly basis, or such other frequency as Dickey's determines in its sole discretion. Payments of Royalty Fees and Marketing Fund contributions shall be determined based upon information retrieved by Dickey's from the Point of Sale System (as defined in Article 8.13) regarding the applicable weekly Sales Period. You agree to accept Dickey's calculation of the Royalty Fees and Marketing Fund contributions due hereunder and not attempt to withhold any payments absent manifest mathematical error. You shall execute and deliver to Dickey's the ACH authorization in the form attached as Attachment A hereto (or such other form as may be required by Dickey's or its bank). You further covenant to maintain your account identified in the ACH transfer authorization (your "Bank Account") throughout the term of this Agreement and to maintain within your Bank Account such funds as are necessary to process the payment and transfer of Royalty Fees, Marketing Fund contributions, Rent (as defined in Article 7.5) and Utilities (as defined in Article 7.10) from time to time. You further agree that your Bank Account will be used only in connection with the Restaurant's operation and will not be used for any personal use or expense outside the normal course of the business of the Restaurant.
Source: Item 22 — CONTRACTS (FDD pages 95–96)
What This Means (2024 FDD)
According to Dickeys Barbecue Pit's 2024 Franchise Disclosure Document, franchisees must pay a continuing royalty fee equal to 6% of their restaurant's Net Sales throughout the term of the Franchise Agreement. These royalty fees are due and payable and will be electronically drafted from the franchisee's bank account on or before the Monday following the calendar week to which the payments relate. If the date falls on a non-business day, the payment will be drafted on the next business day.
Dickey's Barbecue Pit requires franchisees to submit a Monthly Sales Report on or before the third day of each calendar month. This report must include the restaurant's Net Sales for each Sales Period during the previous calendar month, the amount of Royalty Fees due for each Sales Period, the Marketing Fund contribution due for each Sales Period, and an income statement and other reports for the restaurant. Franchisees are not entitled to withhold payments due to Dickey's Barbecue Pit based on alleged non-performance by the company.
All payments of Royalty Fees, Marketing Fund contributions, customer refund reimbursements, and any other sums owed to Dickey's Barbecue Pit must be made by ACH electronic transfer from the franchisee's bank account on a weekly or monthly basis, or as otherwise determined by Dickey's Barbecue Pit. Dickey's Barbecue Pit determines payments of Royalty Fees and Marketing Fund contributions based on information retrieved from the Point of Sale System regarding the applicable weekly Sales Period. Franchisees agree to accept Dickey's Barbecue Pit's calculation of the Royalty Fees and Marketing Fund contributions due and not attempt to withhold payments unless there is a manifest mathematical error.
If a franchisee fails to report the restaurant's Net Sales as required, Dickey's Barbecue Pit may debit the franchisee's bank account for an amount equal to the last Royalty Fee and Marketing Fund contribution that Dickey's Barbecue Pit debited, along with any applicable late fees. If Dickey's Barbecue Pit discovers that the amounts debited from the franchisee's bank account are less than the actual amounts owed, Dickey's Barbecue Pit will debit the remaining balance on a specified day. If any payment or fee is not paid when due, the franchisee must pay interest on the overdue amount at a rate of 15% per annum, or the maximum rate permitted by law, whichever is less, in addition to reimbursing Dickey's Barbecue Pit for any out-of-pocket expenses incurred in connection with the late payment or collection.