When does a Fitstop franchisee begin paying the Royalty Fee?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
for the full price in the month during which such charge or sale shall be made, irrespective of the time when you shall receive payment (whether full or partial) therefor.
- ©2024 Fitstop USA, Inc. 13.3 Royalty Fee(s); Minimum Royalty. Upon the earlier of the date (a) you open your Franchised Business, and (b) the date you are required to open the Franchised Business under this Agreement, you must pay us an ongoing royalty fee (the "Royalty Fee") amounting to the greater of: (i)
7% of the Gross Revenue generated by the Franchised Business; and (ii) $1,500/month (the "Minimum Royalty"). The Parties agree and acknowledge as follows: (i) the Royalty Fee may be deducted from the Gross Revenue of the Franchised Business by our Approved Supplier for billing/collection services; and (ii) the Minimum Royalty shall be (a) waived over the first six (6) full or partial calendar months the Franchised Business is open and operating provided you timely open the Franchised Business under this Agreement, and (b) subject to annual adjustment consistent with the Consumer Price Index ("CPI") and inflation.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee must begin paying the Royalty Fee upon the earlier of two dates: (a) when the Franchised Business opens, or (b) when the franchisee is required to open the Franchised Business under the Franchise Agreement. The Royalty Fee is the greater of 7% of Gross Revenue or $1,500 per month (the "Minimum Royalty").
However, the Minimum Royalty is waived for the first six full or partial calendar months that the Franchised Business is open and operating, provided the franchisee opens the business on time according to the Franchise Agreement. If the Franchised Business does not open on time, the Minimum Royalty commences in the first calendar month the business was required to open.
The Minimum Royalty is also subject to annual adjustments based on the Consumer Price Index (CPI) and inflation. Gross Revenue is defined as the total consideration received for all goods and services, including membership fees, but excluding refunds, uncollectible debts, and taxes collected and paid to a tax authority.