When are the continuing royalty and marketing fees payable for Expense Reduction Analysts?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise agreements also provide for continuing royalty and marketing fees which are based on gross billings and are payable when client billings are rendered. The royalty fee, 15% of gross billings, compensates the Company for various support services that it provides to the franchise on an ongoing basis and is subject to a variable minimum fee. Royalty fees are recognized as revenue when receipts from client billings are received.
Minimum Royalty Fee Payment Terms: payable to the Franchisor in advance by direct debit within eight (8) days of each Month during the term.
Monthly Reconciliation (aka "Smoothing"): each month, or in any other frequency the Franchisor designates in writing, the Franchisor will calculate Your Net Cumulative Receipts to date for the calendar year ("YTD"), in order to determine whether You must pay the 15% of Net Cumulative Receipts, or the Minimum Royalty Fee, for the immediately preceding calendar month.
The marketing fee, 3% of gross billings, funds various marketing efforts as determined by the Company; in the past, marketing fees were recorded as Due to Marketing Campaign, when receipts from client billings are received, until marketing expenditures are incurred. Under Topic 606, franchise marketing fees and related cost are presented on a gross basis, as revenue and expense, in the consolidated statement of operations, rather than net of operating expenses on the consolidated balance sheet.
Franchise agreements provide for management software fees up to $1,000 per year per user. These fees are recognized as revenue when earned.
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, continuing royalty and marketing fees are based on gross billings and are payable when client billings are rendered. The royalty fee is 15% of gross billings. This compensates Expense Reduction Analysts for the support services it provides to the franchisee on an ongoing basis and is subject to a variable minimum fee.
The minimum royalty fee is payable to Expense Reduction Analysts in advance by direct debit within eight days of each month during the term. Each month, or in any other frequency Expense Reduction Analysts designates in writing, Expense Reduction Analysts will calculate the franchisee's Net Cumulative Receipts to date for the calendar year, in order to determine whether the franchisee must pay the 15% of Net Cumulative Receipts, or the Minimum Royalty Fee, for the immediately preceding calendar month.
The marketing fee is 3% of gross billings and funds various marketing efforts as determined by Expense Reduction Analysts. Franchise agreements also stipulate management software fees up to $1,000 per year per user, which are recognized as revenue when earned.