Can Mrcool modify the minimum royalty in a renewal Franchise Agreement?

According to Mrcool's 2025 Franchise Disclosure Document, Mrcool retains the right to modify the minimum royalty in any renewal Franchise Agreement based on their reasonable business judgment. However, the FDD specifies that the minimum royalty during any renewal term will not be less than the minimum royalty in place for Year 4 and thereafter, which is $2,160 per month.

This means that while Mrcool can adjust the minimum royalty when a franchisee renews their agreement, they cannot reduce it below the established Year 4 minimum. For a prospective franchisee, this provides some level of predictability regarding royalty costs upon renewal. It also suggests that Mrcool may increase the minimum royalty to reflect changes in market conditions or the overall performance of the Mrcool franchise system.

It is important for potential Mrcool franchisees to understand that while the royalty rate is capped at 2.5% of monthly Gross Sales with incremental increases limited to 0.5% per year, the minimum royalty is subject to change at the time of renewal, potentially impacting profitability. Franchisees should consider this factor when projecting long-term costs and revenues, and discuss with Mrcool what factors might influence royalty adjustments upon renewal.