How does My Salon Suite define and calculate the royalty fee?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. Franchise Fee. Franchisee shall pay to Franchisor, upon execution of this Franchise Agreement, a non-refundable initial franchise fee in the amount identified on Attachment A ("Initial Franchise Fee"), The entire Initial Franchise Fee is deemed fully earned upon payment and is not refundable under any circumstances, in consideration of:
- (i) administrative, legal, and other expenses incurred by Franchisor in granting this franchise; and
- (ii) Franchisor's lost or deferred opportunity to enter into this Franchise Agreement with others.
- B. Royalty Fee. Franchisee shall, on or before the tenth (10th) day of each month, pay to Franchisor a monthly royalty fee ("Royalty Fee") equal to two and three-quarters percent (2.75%) of Gross Revenues for the previous month for the first six (6) months that the Franchised Business is open. Beginning the seventh (7th) month through t
Source: Item 23 — RECEIPTS (FDD pages 95–230)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, the royalty fee is calculated as a percentage of gross revenues, with a minimum monthly payment required after the initial period. For the first six months of operation, the franchisee pays a monthly royalty fee of 2.75% of Gross Revenues. From the seventh through the twelfth month, the royalty fee increases to 5.5% of Gross Revenues.
Starting in the thirteenth month and continuing for the remainder of the franchise term, the franchisee pays the greater of $1,000 or 5.5% of Gross Revenues as the monthly royalty fee. This structure means that even if a My Salon Suite location has low revenues, there is still a minimum royalty payment due to the franchisor.
This type of royalty structure is common in franchising, where franchisors collect ongoing fees based on a percentage of sales. The tiered approach, with increasing percentages and a minimum payment, is designed to support both new and established locations. Franchisees should carefully consider their projected revenues to understand how the royalty fee will impact their profitability, especially after the first year when the minimum payment applies.