What happens if a Floyds 99 franchisee does not obtain advance approval for discounts?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty1 | 6% of Gross Sales | Payable on the day of the week we periodically designate, based on prior week's Gross Sales | Gross Sales include all revenue from the Barbershop, including sales made away from the Barbershop premises. Gross Sales do not include sales taxes and discounts that have been approved by us in advance. Royalties are paid by electronic transfer of funds. |
| National Marketing Contribution1 | Currently 1.5% of Gross Sales, but we can require (upon 90 days' notice to you) up to a maximum of 3.0% of Gross Sales. The combination of the National Marketing Contribution and Local Advertising Allocation will not exceed a total of 4% of Gross Sales. (See Royalty Remarks above for discussion of "Gross Sales") | Payable on the day of the week we periodically designate, based on prior week's Gross Sales | We currently collect a National Marketing Contribution equal to 1.5% of Gross Sales and reserve the right to increase this amount up to 3.0% of Gross Sales on 90 days' prior written notice to you. Contributions are used primarily for production of advertising and marketing for the Barbershops. See Item 11. Our affiliate-owned Barbershops contribute the same as franchisee-owned Barbershops. The National Marketing Contribution is paid by electronic transfer of funds separate from the royalty transfer. Certain franchisees that signed Franchise Agreements prior to the date of this Disclosure Document have a National Marketing Contribution requirement of 1% of Gross Sales. |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, a franchisee's gross sales, which are used to calculate royalty and marketing fees, do not include sales taxes and discounts that have been approved in advance by Floyds 99. This means that if a franchisee offers discounts without first getting approval from Floyds 99, those unapproved discounts will not be deducted from the gross sales figure when calculating royalty and marketing fees.
In practical terms, this policy means that Floyds 99 franchisees need to be diligent about getting discounts pre-approved. If a franchisee offers unapproved discounts, they will end up paying a higher royalty fee (6% of gross sales) and national marketing contribution (currently 1.5% of gross sales, but could increase to 3.0%) than they would if the discounts had been approved. This can significantly impact a franchisee's profitability, especially if they offer discounts frequently or in large amounts.
This policy incentivizes franchisees to adhere to Floyds 99's pricing and promotional strategies. It also gives Floyds 99 control over the types and amounts of discounts offered, which helps maintain brand consistency and profitability across all locations. Franchisees should therefore establish a clear process for requesting and obtaining discount approvals from Floyds 99 to avoid unnecessary expenses.