What is the relationship between Gross Revenues and the Learningrx royalty fee?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
nd costs in this Item 6 are uniformly imposed. All fees are non-refundable.
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- Gross Revenues. "Gross Revenues" means the total of all receipts derived from services or Products sold by you, whether the receipts are evidenced by cash, credit, checks, gift certificates, scrip, coupons, services, property, bartering, or other means of exchange. Gross Revenue excludes only sales tax receipts that you must by law collect from customers and that you actually pay to the government, promotional or discount coupons to the extent that Franchisee realizes no revenue, and employee receipt of services or Products, if free, or any portion not paid for by an employee. Cash income reports from the accounting software, without any deductions for any fees due to collection method, are used to calculate the royalty amounts due each month.
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- Minimum Monthly Royalty. You are required to pay a "Minimum Monthly Royalty" of $500 for Micro Franchises and $800 for Standard Franchises rather than 8% of your Gross Revenues if 8% of your Gross Revenues does not exceed the Minimum Monthly Royalty applicable to your franchise. This minimum starts after the Center has been in operation for 6 full months. On a quarterly basis, royalty totals paid for the quarter are reviewed, and a Center is credited in the month following the quarter, if the average per month over the quarter exceeded the monthly minimums. Example: If monthly gross revenues for a Standard Franchise are $9,000, $31,000 and $30,000 in a quarter, the minimum of $800 would have been paid in royalties in the first month, but $80 will be credited to the Center since the quarterly royalty total paid exceeded $2,400.
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- Boost Marketing Program. You are required to spend up to $3,000 per year for Boost Marketing Program activities such as web directories, reputation management and other Boost marketing activities initiated by and paid to us. This amount is in addition to any other advertising requirement.
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- Center Marketing Program. After the first year, the Center marketing plan will be required of a Center that generates less than $300,000 gross revenue for a standard franchise or $150,000 for a micro franchise for the previous 12-month period and the franchisee fails to meet its minimum marketing requirements for the past 12 months.
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- Marketing Development Fund (MDF). You are required to pay the greater of either (i) 3% of Gross Revenues per month, or (ii) the or the "Minimum MDF Payment" of $200 for Micro Franchises and $300 for Standard Franchises, up to a maximum of $15,000 per calendar year per Center into the Marketing Development Fund. Payment into the Fund is due in the same time and manner as the Royalty Fee. On a quarterly basis, Marketing Development Fund totals paid for the quarter are reviewed, and a Center is credited in the month following the quarter, if the average per month over the quarter exceeded the monthly minimums. Example: If monthly gross revenues for a Standard Franchise are $9,000, $31,000 and $30,000 in a quarter, the minimum of $270 would have been paid in MDF fees in the 1st month, but $70 will be credited to the Center since the quarterly royalty total paid exceeded $600.
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- Regional Advertising Cooperative.
Source: Item 6 — OTHER FEES (FDD pages 13–19)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the royalty fee is directly related to the Gross Revenues of the franchise. Learningrx defines "Gross Revenues" as the total income from services or products sold, including cash, credit, checks, and other forms of exchange, but excluding sales tax receipts paid to the government, revenue-free promotional coupons, and free employee services or products.
For Learningrx franchisees, there is a minimum monthly royalty fee. Micro Franchises must pay a minimum of $500, while Standard Franchises must pay $800. If 8% of a franchisee's Gross Revenues does not exceed this minimum, the franchisee pays the minimum monthly royalty. After the Learningrx center has been in operation for six full months, this minimum royalty applies. If a franchisee pays the minimum monthly royalty, but their average monthly royalty based on 8% of gross revenues exceeds the minimum over a quarter, Learningrx will credit the franchisee the difference.
In addition to royalties, Learningrx franchisees must also contribute to the Marketing Development Fund (MDF). This contribution is the greater of 3% of Gross Revenues per month or a minimum payment ($200 for Micro Franchises and $300 for Standard Franchises), up to a maximum of $15,000 per calendar year. Similar to the royalty fee, Learningrx reviews MDF payments quarterly and credits the franchisee if the average monthly payment based on 3% of gross revenues exceeds the minimum. Franchisees may also be required to spend up to 3% of Gross Revenues on cooperative advertising, with a maximum of $3,000 per month, starting in the seventh month of operation.