What are the two components that determine the amount of the ongoing royalty fee for a Fitstop franchise?
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 ongoing royalty fee is the greater of two components: 7% of the Gross Revenue generated by the Franchised Business, or a minimum royalty of $1,500 per month. Gross Revenue includes all consideration received for goods and services, including membership fees.
The minimum royalty fee 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 business opening is delayed, the minimum royalty fee commences in the first month the business was required to open.
The $1,500 minimum royalty is subject to annual adjustments based on the Consumer Price Index (CPI) and inflation. This means the minimum royalty could increase over time, reflecting changes in the cost of living. Franchisees should factor in potential increases to the minimum royalty when projecting their operating expenses.