What is the 'Membership Fee Payment' for a Red Wagon Club franchise?

According to the 2024 Red Wagon Club Franchise Disclosure Document, the 'Membership Fee Payment' that Red Wagon Club remits to the franchisee is equal to one-third (1/3) of the membership fees paid by members of the franchisee's Red Wagon Club business under Membership Agreements during the preceding month. This payment is made on or before the 10th day of each calendar month.

This means that a Red Wagon Club franchisee receives a portion of the membership fees collected from their members. The exact amount depends on the total membership fees generated each month. This arrangement could incentivize franchisees to actively recruit and retain members to increase their monthly revenue.

However, the FDD also indicates that the franchisor's affiliate, OpCo, may initially handle membership agreements and fee collection, remitting one-third to the franchisee. Red Wagon Club retains the right to shift this responsibility to the franchisee, in which case the franchisee would collect the fees and remit two-thirds to Red Wagon Club. This potential change in responsibility is an important factor for prospective franchisees to consider, as it affects cash flow management and administrative tasks.