Under what conditions is the minimum royalty fee waived for a new 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, new franchisees may have their minimum royalty fee waived for a limited time. Specifically, the $1,500 monthly minimum royalty fee is waived for the first six full or partial calendar months that the Fitstop franchise is open and operating.
However, this waiver is conditional. To qualify, the franchisee must open their Fitstop business in a timely manner, as required by the Franchise Agreement. If the opening is delayed beyond the agreed-upon timeframe, the minimum royalty fee commences in the first calendar month when the business was originally scheduled to open, regardless of whether it is actually open at that time.
This waiver provides a financial benefit to new Fitstop franchisees during the initial months of operation, helping to alleviate some of the financial pressures as they establish their business. It incentivizes franchisees to open promptly to take full advantage of the royalty fee waiver. The royalty fee is also subject to annual adjustments based on the Consumer Price Index and inflation.