Is there a grace period for Mr. Sandless Royalty Fees after opening a new franchise?
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. |
| Additional Territory Fee | $5,000 per 100,000 population | As incurred upon signing an Amendment to add Territory | If you meet our qualifications, you have the option to purchase additional territory to a maximum of 4 territories under your Franchise Agreement. |
| Surveys | $140 | On demand | If we conduct a customer satisfaction survey for your Business and the results of the survey are below our minimum standards, we have the right to bill you for the cost of the survey. |
Source: Item 6 — OTHER FEES (FDD pages 10–13)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, new franchisees receive a grace period for royalty fees. Specifically, Mr. Sandless does not require franchisees to pay royalty fees for the first three months after opening their franchise. This grace period does not apply to franchise transfers. After this initial three-month period, the royalty fee is 6% of gross sales or $600, whichever is greater.
This royalty fee is paid monthly, with payments due no later than the 15th day of each month for the previous calendar month's gross sales. If the 15th falls on a non-business day, the due date shifts to the next business day. Gross sales include all revenues generated from the business, excluding taxes collected on behalf of governmental authorities, and are calculated on a cash basis. Refunds or exchanges are deducted from gross sales at the time they occur, provided the original sales were previously included in gross sales.
This initial royalty fee grace period can be a significant benefit for new Mr. Sandless franchisees, allowing them to establish their business and generate revenue before needing to pay royalties. It is important for prospective franchisees to factor this into their initial financial planning and understand the terms and conditions related to gross sales calculations to accurately determine their royalty obligations after the grace period.