When does the minimum royalty fee begin to be charged for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
eferred 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
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, franchisees are required to pay a recurring royalty fee, which is the greater of 8% of gross sales or a minimum royalty fee. The minimum royalty fee for an Extreme Art Studio franchise is $500 per month for each business operated under the Franchise Agreement.
The minimum royalty fee begins to be charged 6 months after the franchisee opens their first Extreme Art Studio business. For each subsequent Extreme Art Studio business opened under a Standard Franchise, the minimum royalty fee is charged immediately upon opening.
This means that franchisees will have a grace period of six months after opening their first location before the minimum royalty fee applies, which can help with initial cash flow. However, franchisees need to be prepared to pay either 8% of their gross sales or $500 per month, whichever is greater, starting six months after opening their first location and immediately for any subsequent locations.