When does the Minimum Royalty payment requirement begin for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
OTHER FEES**
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty(2) | The greater of 8% of Gross Sales ("Royalty") or $500 per month ("Minimum Royalty") | Within five days after the end of the calendar month | The Royalty is based on "Gross Sales" during the previous month. Gross Sales are defined in Note 2. You must pay your Royalty via electronic funds transfer ("EFT"), or such other manner we may prescribe. The Minimum Royalty begins six months after you open your first Extreme Art Studio Business and immediately after you open additional Extreme Art Studio B |
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the minimum royalty payment requirement begins at different times depending on whether it is the franchisee's first location or an additional location. For the first Extreme Art Studio Business, the minimum royalty payment of $500 per month starts six months after the business opens.
However, if a franchisee opens additional Extreme Art Studio Businesses, the minimum royalty payment requirement begins immediately upon opening each additional location. This means that franchisees need to be prepared to meet the minimum royalty obligation from day one for any locations beyond their first.
It is important for prospective franchisees to factor these timelines into their financial projections. They should anticipate a ramp-up period for the first location before the minimum royalty kicks in, but they must also be ready to meet the minimum payment right away for any subsequent locations.