What are the gross sales thresholds for the 5% 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 is dependent on the gross sales during a specific period. The franchise agreement specifies a tiered royalty structure. For gross sales above $50,000 during the period, the royalty rate is 5%.
In practical terms, this means that as an Engineering For Kids franchisee's gross sales increase beyond $50,000 in a given period (typically a month, though it could be bi-weekly or weekly), the percentage of revenue paid to the franchisor decreases to 5%. This incentivizes franchisees to increase their sales volume, as a larger portion of the revenue will be retained by the franchisee once this threshold is met.
It's important for prospective franchisees to understand these thresholds and how they impact profitability. Accurately tracking and reporting gross sales is critical, as underreporting can lead to penalties or even termination of the franchise agreement. Franchisees should also factor in the minimum royalty requirements, which apply after the initial six months of operation, to fully understand their financial obligations to Engineering For Kids.