What is the relationship between Gross Sales and the Applicable Royalty Rate for Engineering For Kids?
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 |
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 royalty fees are tied to the franchisee's gross sales, with tiered rates. The franchisee will pay the greater of either a percentage of gross sales, or a minimum royalty of $300 per month, starting in the seventh month after signing the Franchise Agreement.
The specific royalty rates are: 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 authority, customer coupon sales (where customers don't pay for services), and refunds.
To qualify for reduced royalty rates (less than 7%), the franchisee must comply with all royalty and brand fund contribution requirements. These royalty fees are payable monthly, specifically on or before the 5th day of each subsequent period. Engineering For Kids also requires franchisees to provide a correct statement of their Gross Sales for the period just ended, along with any period reports outlined in the Brand Excellence Manual. They also have the right to inspect the franchisee's original books and records.