When does the obligation to pay the ongoing royalty fee begin for a Fitstop franchise?
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. 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 ongoing royalty fee is due upon the earlier of two dates: either when the franchisee opens their Fitstop franchised business, or when the franchisee is required to open their business as per the Franchise Agreement.
The ongoing royalty fee is the greater of 7% of the Gross Revenue generated by the franchised business or $1,500 per month, which is referred to as the Minimum Royalty. The Minimum Royalty is waived for the first six full or partial calendar months that the Fitstop business is open and operating, provided the franchisee opens the business on time according to the agreement.
However, if the Fitstop franchised business does not open on time, the Minimum Royalty commences in the first calendar month when the business was required to open. The Minimum Royalty is also subject to annual adjustments based on the Consumer Price Index (CPI) and inflation. This means a franchisee needs to be prepared to pay the royalty fee as soon as they open or are contractually obligated to open, understanding that the initial months may have a waiver period if the opening is on schedule.