Where in the 'Extreme Art Studio' franchise agreement can I find information about the royalty fee?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
sses and our loss of deferred opportunity to enter into this Franchise Agreement with others, and it also offsets some of our expenses for franchisee recruitment.
3.2 ROYALTY FEE.
- 3.2.1 You agree to pay us a recurring royalty fee ("Royalty") for each calendar month (or other accounting period that we may designate from time to time). The amount of the Royalty will be equal to the greater of: (i) eight percent (8%) of your Gross Sales from all of your Extreme Art Studio Businesses for the previous calendar month (or other accounting period we designate); or (ii) $500 per month for each Extreme Art Studio Business you operate under this Franchise Agreement ("Minimum Royalty"). The Minimum Royalty shall begin being charged by us 6 months after you open your first Extreme Art Studio Business under this Franchise Agreement and immediately upon opening each subsequent Extreme Art Studio Business under a Standard Franchise (if applicable).
- 3.2.2 For purposes of this Franchise Agreement, "Gross Sales" means all revenue that you receive from operating
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, details regarding the royalty fee can be found in Section 3.2 of the franchise agreement. Franchisees are obligated to pay a recurring royalty fee for each calendar month, or another accounting period designated by Extreme Art Studio.
The royalty fee is calculated as the greater of two options: either eight percent (8%) of the franchisee's Gross Sales from all Extreme Art Studio Businesses for the previous month, or a minimum of $500 per month for each Extreme Art Studio Business operated under the Franchise Agreement. This minimum royalty charge begins six months after the opening of the first Extreme Art Studio Business and immediately upon opening each subsequent Extreme Art Studio Business under a Standard Franchise.
The Franchise Agreement defines "Gross Sales" as all revenue received from operating the Franchised Business, including any modules. This encompasses all amounts received directly or indirectly, whether at or away from the Extreme Art Studio Business, and in any form, such as cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions. It also includes all proceeds from any business interruption insurance.