How is the Royalty fee calculated for an Engineering For Kids franchise?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
3.2. Royalty
3.2.1. You must pay us an ongoing royalty fee ("Royalty") in an amount equal to the greater of (a) the Gross Sales for the Period (as defined in Section 3.2.2 below) multiplied by the Applicable Royalty Rate(s) (as defined in Section 3.2.1.1 below) for that Period; or (b) the monthly "Minimum Royalty" applicable for such month (as defined in Section 3.2.1.2 below). The Royalty is for your right to use the Proprietary Marks and the System under this Agreement, and not in exchange for any specific services we render.
3.2.1.1. The rates used in calculating the Royalty payments during the Term are the percentage rates listed below (the "Applicable Royalty Rates"), which are applied based on the Gross Sales of your Franchised Business during 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 Contribution requirements.
Source: Item 23 — RECEIPTS (FDD pages 53–138)
What This Means (2025 FDD)
According to the 2025 Engineering For Kids FDD, the franchisee must pay a royalty fee. This royalty is calculated as the greater of two options: either a percentage of the Gross Sales for the Period multiplied by the Applicable Royalty Rates for that Period, or the monthly Minimum Royalty applicable for that month.
The Royalty fee is for the right to use the Engineering For Kids' Proprietary Marks and System, not for specific services rendered by the franchisor. The franchisee is responsible for determining the Applicable Royalty Rate(s) for each period and calculating the Royalty due based on the Gross Sales reported to the franchisor.
To qualify for reduced Applicable Royalty Rates, the franchisee must be in compliance with their Royalty and Brand Fund Contribution requirements. The FDD does not specify the exact percentage used to calculate the royalty fee. Prospective franchisees should inquire about the specific royalty rates and minimum royalty amounts during their due diligence.