How is the 'Membership Fee Payment' for a Red Wagon Club franchisee calculated?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Membership Fees | Two-thirds (2/3) of amounts collected under Membership Agreements | We account for these fees monthly by the 10th of each month for the preceding month | Currently, our affiliate, OpCo, will enter into Membership Agreements with the Members of your RWC Business and will collect the membership fees paid under such agreements. OpCo will remit to you one third (1/3) of such membership dues monthly. However, we may elect to have you enter into Membership Agreements directly with your clients, in which case you would collect such membership fees and remit to us two-thirds (2/3) thereof each month. See Note 3. |
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- Membership Fees. On or before the 10th day of each calendar month, we will remit to you an amount (the "Membership Fee Payment") equal to one-third (1/3) of membership fees paid by Members of your RWC Business under Membership Agreements during the preceding month.
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, the 'Membership Fee Payment' calculation depends on who collects the membership fees. Initially, Red Wagon Club's affiliate, OpCo, handles membership agreements and fee collection. In this scenario, OpCo remits one-third (1/3) of the membership dues collected each month to the franchisee. This payment is made by the 10th of each month, covering the preceding month's collections.
However, Red Wagon Club retains the option to shift the responsibility of membership agreements and fee collection to the franchisee. Should this occur, the franchisee would then collect membership fees directly from clients and, in turn, remit two-thirds (2/3) of the collected amount to Red Wagon Club monthly. This change would affect the franchisee's cash flow and administrative responsibilities.
In either scenario, the 'Membership Fee Payment' represents the franchisee's share of the membership fees, with the other portion going to either Red Wagon Club or its affiliate, OpCo. This fee structure is typical in franchise systems where ongoing fees are tied to revenue, but the specific split (1/3 vs. 2/3) is a key factor for prospective franchisees to consider when evaluating potential earnings and obligations.