Where in the Mrcool FDD can I find information about Royalty Fees?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
5.B. ROYALTY FEES
Throughout the Term of this Agreement, Franchisee shall pay to Franchisor a continuing monthly nonrefundable royalty fee (the "Royalty Fee") in an amount equal to the greater of either (i) 1% (the "Royalty Rate") of your monthly Gross Sales; or (ii) the minimum royalty based upon the following schedule ("Minimum Royalty"):
Tax Obligations: If any federal, state or local tax, other than an income tax, is imposed on the Royalty Fee paid by Franchisee to Franchisor that, Franchisor cannot directly and, dollar for dollar, offset against taxes required to be paid by Franchisor under any applicable federal or state laws, Franchisee must compensate Franchisor in the manner prescribed by Franchisor so that the net amount or net rate received by Franchisor for the Royalty Fee is not less than that which has been established by this Agreement and which was due to Franchisor on the effective date of this Agreement.
Payment Authorization: Upon the request of Franchisor and in no event not later than 30 days prior to the earlier of the Actual Business Commencement Date or the Scheduled Business Commencement Date, Franchisee shall execute Franchisor's designated ACH Authorization Form and such other authorization agreements, in the form proscribed by Franchisor and permitting Franchisor's direct withdrawal and/or electronic transfer of sums from Franchisee's designated business bank account, for the on-going payment
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, details regarding royalty fees can be found in Article 5.B. Specifically, throughout the term of the agreement, the franchisee is required to pay a continuing monthly nonrefundable royalty fee. This royalty fee is the greater of either 1% of the monthly Gross Sales or a minimum royalty based on a schedule.
The FDD also clarifies tax obligations related to the royalty fee. If any federal, state, or local tax (excluding income tax) is imposed on the royalty fee paid by the franchisee and Mrcool cannot directly offset this tax, the franchisee must compensate Mrcool. This compensation ensures that Mrcool receives the net amount or rate established by the agreement.
Furthermore, Mrcool requires franchisees to authorize direct withdrawal or electronic transfer of funds for ongoing payments of royalty fees and other amounts due under the agreement. Franchisees must execute Mrcool's designated ACH Authorization Form, allowing direct debit from their business bank account. Mrcool retains the right to require alternative payment methods for royalty fees and other amounts if deemed appropriate.