How is the royalty payment amount determined for a Petro Stopping Center franchise?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
e second and third Franchise Agreements you or your Affiliates execute with us shall be reduced by $25,000 from the Franchise Fee set forth in our then current form of Franchise Agreement, subject to you and each of your Affiliates being in compliance with all Franchisee Agreements with us and our Affiliates; and
- (ii) The Franchise Fee due and owing under the fourth and each subsequent Franchise Agreement you or your Affiliates execute with us shall be reduced by $50,000 from the Franchise Fee set forth in our then-current form of Franchise Agreement, subject to you and your Affiliates being in compliance with all Franchise Agreements with us and our Affiliates.
- 9.2 Ongoing Fees. In return for our providing you the right to use the Petro System during the Term, you agree to pay us the following:
- (a) Royalty. A continuing royalty ("Royalty"), as follows**:**
- (i) for Non-Fuel Gross Sales:
- (1) 4.5% of all Non-QSR Gross Sales up to, and including, Six Hundred Thousand Dollars ($600,000) per month of Non-QSR Gross Sales (the "Threshold Amount"); and
- (2) 2% of : (i) all Non-QSR Gross Sales in excess of the Threshold Amount; and (ii) all QSR Gross Sales.
- (3) Notwithstanding the above, you shall not be required to pay any Royalty with respect to Gross Sales derived from a food concept that you operate at the Petro Center pursuant to a separate franchise or license agreement with us or our Affiliates, if such separate franchise or license agreement requires payment of royalties to us or our Affiliates.
- (ii) for Motor Fuel Gross Sales:
- (1) $.007 on each gallon of Motor Fuel sold.
- (i) for Non-Fuel Gross Sales:
- (a) Royalty. A continuing royalty ("Royalty"), as follows**:**
- (b) Administrative Fee. An administrative fee ("Administrative Fee") of 0.3% of all Non-Fuel Gross Sales up to, and including, Six Hundred Thousand Dollars ($600,000) per month of Non-Fuel Gross Sales (the "Administrative Threshold Amount").
- On January 1 of each calendar year, the Threshold Amount and Administrative Threshold Amount shall be increased by using the CPI Adjustment. In no event shall the thencurrent Threshold
Source: Item 14 — Other investments (FDD pages 131–208)
What This Means (2025 FDD)
According to the 2025 Petro Stopping Center Franchise Disclosure Document, the royalty fee is calculated based on a percentage of Gross Sales, with different rates for Non-Fuel Gross Sales and Motor Fuel Gross Sales. For Non-Fuel Gross Sales, the royalty is 4.5% of gross sales up to $600,000 per month. For Non-Fuel Gross Sales exceeding $600,000 per month and all QSR (Quick Service Restaurant) Gross Sales, the royalty is 2%. For Motor Fuel Gross Sales, the royalty is $.007 per gallon of motor fuel sold.
There is an exception to the royalty payment. Franchisees are not required to pay royalties on Gross Sales from a food concept operated under a separate franchise or license agreement with Petro Stopping Center or its affiliates, if that separate agreement already requires royalty payments. The franchisee must report the amount of Gross Sales for the preceding accounting period on the designated Report Day of each accounting period, and pay the royalty by the 10th business day following the Report Day.
In addition to the royalty fee, franchisees must pay an administrative fee of 0.3% of all Non-Fuel Gross Sales up to $600,000 per month. Both the $600,000 threshold for Non-Fuel Gross Sales and the administrative fee threshold are subject to an annual increase based on the CPI (Consumer Price Index) Adjustment. However, these thresholds will never decrease, even upon renewal of the franchise agreement.
Prospective franchisees should carefully consider these ongoing fees as part of their financial projections. Understanding how Gross Sales are defined and reported is crucial for accurate royalty calculations. Franchisees should also be aware of the annual CPI adjustments, which can impact the royalty and administrative fee thresholds over time.