How does a Gokhale Method franchisee pay royalties for Direct-Pay Students?
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.
- 5.4. Royalty Fee GMI Pay. For GMI-Pay Students we will collect our royalty, Billing Fee and any other amounts that you owe us from the amount tendered by the student to us. After such deductions, we will
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, franchisees are required to pay royalties on student payments. The method of royalty payment depends on how the student pays. When students pay the Gokhale Method directly through their payment system, these are referred to as "GMI-Pay Students". However, if students pay the franchisee directly via cash, check, or a credit card system at the franchisee's facility, they are considered "Direct-Pay Students".
For Direct-Pay Students, Gokhale Method franchisees must pay a royalty according to the Royalty Schedule in effect at the time of payment. This royalty is non-refundable and is paid for the duration of the franchise term. The specific Royalty Schedule is included in Exhibit A of the Franchise Agreement and is subject to change at the Gokhale Method's discretion, with thirty days' notice.
In contrast, for GMI-Pay Students, the Gokhale Method collects the royalty, billing fee, and any other amounts owed by the franchisee directly from the student's payment. After deducting these fees, the Gokhale Method remits the remaining balance to the franchisee according to their payment schedule. This distinction highlights that franchisees need to actively manage and remit royalty payments for Direct-Pay Students, while the Gokhale Method handles the royalty collection for GMI-Pay Students automatically.
Prospective franchisees should carefully review Exhibit A of the Franchise Agreement to understand the current Royalty Schedule and Billing Fee Schedule. They should also inquire about any potential changes to these schedules and factor these royalty obligations into their financial projections. Understanding the payment methods and associated royalty remittance processes is crucial for managing cash flow and maintaining compliance with the franchise agreement.