Is the minimum royalty fee for a Fitstop franchise subject to annual adjustment?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
le 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. 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, the minimum royalty fee is subject to annual adjustments. Specifically, the minimum royalty fee is subject to annual adjustment consistent with the Consumer Price Index (CPI) and inflation.
The standard ongoing royalty fee is the greater of 7% of gross revenue or $1,500 per month. The $1,500 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.
Because the minimum royalty fee can be adjusted annually based on CPI and inflation, prospective Fitstop franchisees should factor in potential increases to this fee when projecting their operating expenses. Understanding how these adjustments are calculated and what historical CPI data indicates can help in long-term financial planning.