What is the Royalty Fee that a Pearce Bespoke franchisee must pay to the franchisor?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
ile with them in the amount of the initial (and development) fee multiplied by the number of franchises to be sold in Illinois.
5. ROYALTY FEE
A. Royalty Fee.
Franchisee will, for the term of this Agreement, pay to Franchisor a Royalty Fee equal to the greater of (i) ten percent (10%) of Franchisee's Gross Sales (as defined below), or (ii) a mandatory Minimum Weekly Royalty Fee (as defined in Section 5(B) below). Franchisee's obligation to pay Franchisor the Royalty Fee under the terms of this Agreement will remain in full force and effect until this Agreement has expired or is terminated or transferred under the provisions herein.
B. Mandatory Minimum Performance Standards.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, a franchisee must pay a Royalty Fee for the term of the agreement. This royalty is the greater of two options: ten percent (10%) of the franchisee's Gross Sales, or a mandatory Minimum Weekly Royalty Fee. The obligation to pay this royalty remains in effect until the agreement expires, is terminated, or is transferred.
Gross Sales for Pearce Bespoke is defined as the total revenue received from the sale of goods and services, whether paid in cash, check, credit card, or trade, in connection with the Pearce Bespoke Franchise. Customer refunds and returns are subtracted from this total.
This royalty structure is fairly typical in franchising, where franchisors collect a percentage of revenue to support the brand and provide ongoing services. The 'greater of' clause ensures that Pearce Bespoke receives a minimum payment even if a franchisee's sales are low, which could impact the franchisee's profitability if sales are not meeting expectations.