How does Dryject's royalty service fee in Item 6 relate to the initial franchise fee in Item 5?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
Item 5 INITIAL FEES
Upon our signing the Franchise Agreement, you must pay to us an Initial Franchise Fee of $29,500. The Initial Franchise Fee is fully earned and non-refundable in consideration of administrative and other expenses incurred by us in entering into the Agreement and for our lost or deferred opportunity to enter into the Agreement with others. There is no financing available from us for the payment of the Initial Franchise Fee. The Initial Franchise Fee is uniform to all franchise owners.
[Item 6: OTHER FEES]
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Service Fee | The greater of: 8% of | On the 15th day of the | Minimum is only |
| Gross Revenues or, for | following month by | waived for the first | |
| the first partial | automatic debit/EFT or | three months after | |
| calendar year: $450 per month after 3 months; the second full calendar year: $900 per month; the third full calendar year: $1,300 per month; the fourth full calendar year and forward: $1,450 per month | otherwise | signing the Franchise Agreement. See Note 1 below |
[Item 6: OTHER FEES]
Note 5. Transfer. We will charge a transfer fee of 40% of the then current Initial Franchise Fee
charged by us in the then current Franchise Agreement if you transfer to a third party.
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Renewal | 20% of the then current Initial Franchise Fee | Upon signing Franchise Agreement |
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the royalty service fee and the initial franchise fee are related in a few ways. The initial franchise fee is a flat fee of $29,500, which is paid upon signing the Franchise Agreement. This fee is considered fully earned and non-refundable by Dryject to cover administrative and other expenses. The initial franchise fee is uniform to all franchise owners.
The royalty service fee, on the other hand, is an ongoing fee based on the franchisee's gross revenues. It is calculated as the greater of 8% of gross revenues or a minimum monthly amount. The minimum monthly royalty fee varies depending on the calendar year of operation. For the first partial calendar year (starting month four), it is $450 per month; for the second full calendar year, it is $900 per month; for the third full calendar year, it is $1,300 per month; and for the fourth full calendar year and onward, it is $1,450 per month.
Notably, the initial franchise fee amount is used to calculate other fees. For example, the renewal fee is 20% of the then-current initial franchise fee, and the transfer fee is 40% of the then-current initial franchise fee. Therefore, while the initial franchise fee itself is a one-time payment, its value is used in determining the amount of other fees payable to Dryject during the franchise term. The royalty fee is based on revenue, but is also subject to minimum payments that increase over time.