What does the Contract Staffing Continuing Fee for Management Recruiters consist of?

According to Management Recruiters' 2024 Franchise Disclosure Document, franchisees are required to pay continuing fees throughout the term of the Franchise Agreement. These continuing fees are divided into two categories: the Recruiter Continuing Fee and the Contract Staffing Continuing Fee.

The Contract Staffing Continuing Fee is calculated as the sum of 4.5% of Contract Staffing Payroll plus 18% of the Gross Margin derived from temporary and contract employee staffing services. Contract Staffing Payroll is defined as the gross wages funded by Hire Quest, L.L.C. or its affiliates on behalf of the franchisee for temporary and contract employees. Gross Margin refers to the sums billed by Management Recruiters to customers for temporary and contract employee placement services, less any Temporary and Contract Employee Expenses attributable to those employees.

In practical terms, this means that a Management Recruiters franchisee's ongoing royalty obligations for contract staffing are directly tied to both the payroll expenses and the profitability of their contract staffing operations. The fees are deducted from the franchisee's Gross Margin account as part of the weekly calculation of the Franchisee's Contract Staffing Share. The franchisee will receive their Franchisee's Contract Staffing Share on the Wednesday following the twenty-ninth day after the end of each weekly Accounting Period, provided the Franchise Agreement is in effect and the franchisee is not in default.