What is the definition of 'Threshold Amount' in the context of Petro Stopping Center's ongoing royalty fees?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
ees in the future based on a number of factors, including: (x) the number of prior extensions requested; (y) the number of franchised locations you have; and (z) situation-specific factors. The Opening Extension Fee is payable if and when we grant an opening extension.
OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Ongoing Royalty Fees | You must pay us (i) 4.5% of all Non-QSR Gross Sales up to and including Six Hundred Thousand Dollars ($600,000) per month (the "Threshold Amount") and 2% of all Non QSR Gross Sales in excess of the Threshold Amount; (ii) 2% of all QSR Gross Sales; and (iii) $.007 on each gallon of Motor Fuel sold at your Petro Center1 | Payable monthly 10 business days following the Report Day by electronic funds transfer | Each calendar year the Threshold Amount will be increased by using the CPI Adjustment. You are not required to pay any Royalty under the Franchise Agreem |
Source: Item 6 — OTHER FEES (FDD pages 27–32)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, the 'Threshold Amount' is defined in the context of calculating ongoing royalty fees. Petro Stopping Center franchisees must pay a royalty fee of 4.5% of all Non-QSR Gross Sales up to and including $600,000 per month. This $600,000 figure is referred to as the 'Threshold Amount.' For any Non-QSR Gross Sales exceeding this Threshold Amount, the royalty fee decreases to 2%.
This tiered royalty structure means that Petro Stopping Center franchisees pay a higher percentage on their initial sales up to the Threshold Amount, and a lower percentage on sales above that level. This type of structure can incentivize franchisees to increase their sales volume, as the marginal cost of royalties decreases once they surpass the Threshold Amount. The FDD also specifies that the Threshold Amount will be increased each calendar year using the CPI Adjustment, meaning that the $600,000 figure is not fixed and will likely increase over time to account for inflation.
It is important to note that the Threshold Amount only applies to Non-QSR Gross Sales. QSR Gross Sales, which are sales derived from quick-service restaurants operated at the Petro Center where the franchisee pays royalties to a third party, are subject to a flat 2% royalty fee. Motor Fuel sales are subject to a royalty of $.007 on each gallon sold. Understanding these different categories of gross sales and their corresponding royalty rates is crucial for a prospective Petro Stopping Center franchisee to accurately forecast their ongoing royalty obligations.