What is the range of royalty fees that Monicals Pizza receives from franchisees?

According to Monicals Pizza's 2025 Franchise Disclosure Document, the company receives royalty fees from its franchisees. These royalty fees range from one percent to four percent of the franchisee's sales. The FDD specifies that these ongoing royalty fees are based on actual franchise restaurant sales, which means the fees will fluctuate depending on sales performance. These fees are considered variable consideration, but are recognized as revenue when sales are generated by the franchisees. The royalty fees comprise the entire franchising revenue amount in the consolidated financial statements for the years ended December 31, 2024 and 2023.

For a prospective Monicals Pizza franchisee, this means that the amount of royalty fees paid to the company will directly correlate with the sales generated by their restaurant. If the restaurant performs well and generates high sales, the royalty fees will be higher. Conversely, if sales are lower, the royalty fees will also be lower. This arrangement aligns the franchisor's income with the franchisee's success, incentivizing the franchisor to provide support and resources to help franchisees maximize their sales.

It's important for potential franchisees to consider this variable royalty fee structure when evaluating the financial viability of a Monicals Pizza franchise. While a lower sales volume will result in lower royalty fees, it also means lower overall revenue for the franchisee. Therefore, it's crucial to carefully analyze the potential market, estimate sales projections, and understand the factors that could impact sales performance before investing in a Monicals Pizza franchise. Understanding the dynamics of royalty fees is essential for making informed financial decisions and ensuring the long-term success of the franchise.