What is the 'Applicable Royalty Rate' based on for an Engineering For Kids franchise?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
escribed above.
ITEM 6 OTHER FEES
| Type of Fee (note 1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fees | The greater of: (a) the Applicable Royalty Rate(s) multiplied by the Gross Sales for the Period, or (b) a Minimum Royalty, which will be $300 per month beginning in the 7th month after you sign the Franchise Agreement. See Remarks for the Applicable Royalty Rates. | Payable monthly (at this time) on or before the 5th day of each subsequent Period (note 2) | The "Applicable Royalty Rates" are (note 2): • 7% of Gross Sales between $0 to $25,000 during the Period, • 6% of Gross Sales between $25,000.01 to $50,000 during the Period, and • 5% of Gross Sales in excess of $50,000 during the Period "Gross Sales" means all of your revenue from operating your Franchised Business, but excluding taxes collected from customers and paid to taxing authority, and customer coupon sales (for which customers do not pay for complimentary or reduced pr |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, the Applicable Royalty Rate is tied to the Gross Sales for the Period. The royalty fees are the greater of either the Applicable Royalty Rate(s) multiplied by the Gross Sales for the Period, or a Minimum Royalty of $300 per month, which begins in the 7th month after signing the Franchise Agreement.
The Applicable Royalty Rates are structured as follows: 7% of Gross Sales between $0 to $25,000 during the Period, 6% of Gross Sales between $25,000.01 to $50,000 during the Period, and 5% of Gross Sales in excess of $50,000 during the Period. Gross Sales includes all revenue from operating the Franchised Business, but excludes taxes collected from customers and paid to taxing authorities, customer coupon sales where customers do not pay for complimentary or reduced price services or products, and refunds.
To qualify for reduced Applicable Royalty Rates (those less than 7%), franchisees must comply with their Royalty and Brand Fund Contribution requirements. Royalty fees are payable monthly on or before the 5th day of each subsequent Period. Engineering For Kids may require electronic fund transfers for these payments. Franchisees must provide a correct statement of Gross Sales for the Period and allow Engineering For Kids to inspect their books and records.