What is the minimum monthly royalty fee for a Fitstop franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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. In the event the Franchised Business i
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees must pay a royalty fee, which is the greater of 7% of gross revenue or a minimum of $1,500 per month. This minimum royalty fee is referred to as the "Minimum Royalty." However, this minimum royalty is waived for the first six full or partial calendar months that the Fitstop franchise is open and operating, provided the franchisee opens the business on time according to the franchise agreement. If the Fitstop franchise opening is delayed, the minimum royalty fee starts in the first month the business was required to be open.
It's important to note that the $1,500 minimum royalty fee is subject to annual adjustments based on the Consumer Price Index (CPI) and inflation. This means the minimum amount could increase over time, impacting the franchisee's financial obligations. The royalty fee may be deducted from the gross revenue of the franchised business by Fitstop's approved supplier for billing and collection services.
For a prospective Fitstop franchisee, understanding the royalty structure is crucial for financial planning. While the initial six-month waiver of the minimum royalty provides some financial relief during the startup phase, franchisees should be prepared to meet the minimum payment or the percentage of gross revenue, whichever is higher, after this period. Furthermore, they should factor in potential increases to the minimum royalty due to inflation when projecting long-term costs.