What are 'Direct-Pay Students' in the context of a Gokhale Method franchise?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.2. Student Payments. All payments collected from your students for teaching the System, including but not limited to continuing training or programs which may be offered from time to time will be paid by the student directly to us through our payment system ("GMI-Pay Students") unless such fees are paid by the student to you in cash or by paper check or a credit card system in your facility ("Direct-Pay Students").
- 5.3. Royalty Fee Direct Pay. For Direct-Pay Students you agree to pay us a non-refundable royalty ("Royalty") during the Term in accordance with our Royalty Schedule in effect as of the time of payment. The Royalty Schedule in effect as of the signing of this Agreement is included in the annexed Exhibit A and is subject to change from time to time in our reasonable discretion upon thirty (30) days' notice.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, Direct-Pay Students are those who pay the franchisee directly for Gokhale Method classes, training, or programs. Specifically, these payments are made in cash, by paper check, or through a credit card system managed by the franchisee at their facility. This is in contrast to 'GMI-Pay Students,' who pay Gokhale Method directly through their payment system.
For a prospective Gokhale Method franchisee, understanding the distinction between Direct-Pay and GMI-Pay students is crucial because it affects how royalties and fees are handled. With Direct-Pay Students, the franchisee is responsible for collecting the full payment and then remitting the appropriate royalty to Gokhale Method. The royalty amount is determined by the Royalty Schedule outlined in Exhibit A of the Franchise Agreement, which can be modified by Gokhale Method with 30 days' notice.
In contrast, for GMI-Pay Students, Gokhale Method collects the payment directly from the student, deducts the royalty, billing fee, and any other outstanding amounts owed by the franchisee, and then remits the balance to the franchisee. This difference in payment processing impacts the franchisee's cash flow management and administrative responsibilities. The franchisee needs to be prepared to manage royalty payments for Direct-Pay Students and reconcile these payments with Gokhale Method's records.
It is important for potential franchisees to carefully review Exhibit A of the Franchise Agreement to understand the current Royalty Schedule and Billing Fee Schedule. Additionally, franchisees should stay informed about any changes to these schedules, as Gokhale Method reserves the right to modify them with 30 days' notice. Understanding these payment dynamics is essential for accurately forecasting revenue and managing financial obligations under the Gokhale Method franchise agreement.