What is the minimum royalty fee for a Mr. Sandless business?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 6 OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee – Mr. Sandless Business | 6% of Gross Sales or $600, whichever is greater | No Royalty Fee for the first 3 months after opening, transfers not included. Then monthly, not later than the 15th day of each month | Royalties are payable on your Gross Sales for the previous calendar month. If the 15th day of any month is not a business day, then payment is due on the next business day. See Note 1. |
| Advertising Fund | 1% of Gross Sales | Payable at the same time and in the same manner as the Royalty Fee | You must contribute to our Advertising Fund (described in Item 11) |
| Required Minimum Expenditure for Local Marketing and Advertising | Minimum $1,500 per month. | As incurred. | Payable to third parties. All advertising must be pre-approved by us. See footnote 2. |
Source: Item 6 — OTHER FEES (FDD pages 10–13)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, the royalty fee is 6% of gross sales or $600, whichever is greater. This royalty fee is paid monthly, no later than the 15th day of each month for the previous calendar month's gross sales. If the 15th of the month falls on a non-business day, the payment is due on the next business day. Gross sales include all revenues generated from the business, excluding taxes collected from customers.
For a prospective Mr. Sandless franchisee, this means that even if your gross sales are low in a particular month, you will still owe a minimum royalty of $600. This could impact your profitability, especially in the early months of operation or during slower business periods. It's important to factor this minimum royalty payment into your financial projections and ensure you have sufficient cash flow to cover it.
Notably, Mr. Sandless waives the royalty fee for the first three months after opening, excluding transfers. This initial grace period can provide some financial relief as you establish your business. However, after this period, the minimum royalty fee applies, regardless of your sales volume. Franchisees should also be aware that underreporting revenue or sales can result in a fine of $2,500 per job not reported, so accurate record-keeping is essential.
In addition to the royalty fee, Mr. Sandless franchisees must also contribute 1% of gross sales to the Advertising Fund, payable at the same time and manner as the royalty fee. They are also required to spend a minimum of $1,500 per month on local marketing and advertising, payable to third parties, with all advertising requiring pre-approval from Mr. Sandless. These additional costs should be considered when evaluating the overall financial obligations of the franchise.