Can Pump It Up modify when and how Royalties are due?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Due Date | Remarks | |
|---|---|---|---|
| Royalty (1), (2), (3) | 6% of Gross Revenues | On or before the 7th day of each month. We have the right to modify when and how Royalties are due and payable. | The royalty is based you’re your Gross Revenues in the preceding month, and is payable to us by an automatic, electronic debit from your business checking account. |
Source: Item 6 — OTHER FEES (FDD pages 15–21)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, Pump It Up retains the right to modify the due date and payment method for royalties. The standard royalty is 6% of gross revenues, due on or before the 7th day of each month. Payment is made via automatic electronic debit from the franchisee's business checking account.
This clause in the FDD gives Pump It Up flexibility in managing royalty collection. While the standard procedure is a fixed percentage due monthly, Pump It Up could, in theory, alter the frequency (e.g., weekly or quarterly) or the method of payment, although the FDD specifies that royalties are collected via electronic debit.
For a prospective franchisee, this means the royalty terms are not necessarily fixed for the life of the franchise agreement. Pump It Up could change the due date or payment process, potentially impacting a franchisee's cash flow management. It is important to note that while Pump It Up can modify the 'when and how' of royalty payments, the FDD does not state that they can modify the royalty percentage itself. Franchisees should seek clarification on what circumstances might trigger such changes and how much advance notice Pump It Up would provide.
It is relatively common in franchising for franchisors to retain some flexibility regarding payment terms. However, franchisees should carefully consider the potential impact of such changes on their business operations and financial planning. Understanding the conditions under which Pump It Up might exercise this right is a crucial part of due diligence.