What are the gross sales thresholds for the 7% royalty rate for Engineering For Kids?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
ring each Period. You will determine the Applicable Royalty Rate(s) for each Period, and calculate the Royalty due, based on the Gross Sales that you are reporting to us for that Period. To qualify for the reduced Applicable Royalty Rates, you must be in compliance with your Royalty and Brand Fund Contributi
Source: Item 23 — RECEIPTS (FDD pages 53–138)
What This Means (2025 FDD)
According to Engineering For Kids' 2025 Franchise Disclosure Document, the royalty rate structure is based on gross sales during a period, which is typically a month. For gross sales between $0 and $25,000 during the period, the royalty rate is 7%. If gross sales exceed $25,000, a different royalty rate applies to the incremental revenue.
Specifically, if gross sales are between $25,000.01 and $50,000, the royalty rate is 7% for the first $25,000 and 6% for the additional gross sales between $25,000.01 and $50,000. For gross sales above $50,000 during the period, the royalty rate is 5%. This tiered structure means that the effective royalty rate decreases as the franchisee's gross sales increase.
For a prospective Engineering For Kids franchisee, understanding this tiered royalty structure is crucial for financial planning. It shows that while the initial royalty rate is 7%, higher sales volumes lead to lower rates on the additional revenue, incentivizing growth. Franchisees should carefully project their expected gross sales to accurately estimate their royalty obligations and assess the profitability of their franchise.