When is the Royalty Fee due to Monicals Pizza each month?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalty Fees - The Company receives royalty fees, ranging from one percent to four percent of franchisees' sales. Since ongoing franchise royalty fees are based on actual franchise restaurant sales, the fees will fluctuate and are considered variable consideration. ASC 606 requires variable consideration to be estimated. However, there is an exception to this requirement for sales-based royalties related to licenses of intellectual property. These fees are recognized as revenue when sales are generated by the franchisees and comprise the entire franchising revenue amount in the accompanying consolidated financial statements for the years ended December 31, 2024 and 2023.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the royalty fees, which range from one percent to four percent of franchisees' sales, are recognized as revenue when sales are generated by the franchisees. These fees constitute the entire franchising revenue amount in the consolidated financial statements for the years ended December 31, 2024, and 2023.
In simpler terms, Monicals Pizza franchisees pay a royalty fee based on a percentage of their sales. The exact percentage varies between 1% and 4%. This royalty is calculated and due at the same time that sales are recorded, meaning that as franchisees make sales, they are simultaneously incurring the royalty obligation to Monicals Pizza.
This arrangement is fairly standard in the franchise industry, where royalties are typically tied to a percentage of gross sales. The FDD does not specify the exact day of the month that royalties are due, but it does state that the fees are recognized as revenue when sales are generated by the franchisees.