How is 'Gross Revenues' defined for the purpose of calculating Ledgers' Royalty Fee?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
You will pay us a continuing royalty fee in an amount equal to ten percent (10%) of Gross Revenue (the "Royalty Fee") for each month during the term of this Agreement, which will be paid to Franchisor by the tenth (10th) day of each month based on the Gross Revenue from the preceding month.
The term "Gross Revenues" is defined as all revenues that you derive or receive, directly or indirectly, from the operation of the Franchised Business, excluding only sales and use taxes.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the Royalty Fee is calculated based on Gross Revenues. The Royalty Fee is 10% of Gross Revenue for each month during the term of the Franchise Agreement. This fee is due to Ledgers by the tenth day of each month, based on the Gross Revenue from the preceding month.
For the purpose of calculating the Royalty Fee, Gross Revenues is defined as all revenues that the franchisee derives or receives, directly or indirectly, from the operation of the Franchised Business. The only exclusion from Gross Revenues is sales and use taxes.
This definition is important for prospective franchisees because it clarifies exactly what income is subject to the royalty fee. By excluding only sales and use taxes, Ledgers' definition of Gross Revenues is comprehensive, meaning almost all income generated by the franchise is subject to the 10% royalty. Franchisees need to factor this percentage into their financial projections to accurately assess profitability.