When are the Royalty Fee and Brand Fund Contribution payable by the Southern Steer franchisee?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
$2,000,001 and greater | 4% |
The calculation for the Amount of Annual Gross Revenues will be reset at the beginning of each Calendar Year. If Franchisee purchases an ongoing Southern Steer Business (Transferee), Franchisee will pay the Royalty Fee beginning on the first week of Franchisee's Required Opening Date.
(b) Brand Fund Contribution. Beginning the first Week of Franchisee's Required Opening Date, Franchisee will pay Franchisor a continuing weekly Brand Fund Contribution equal to 1% of Weekly Gross Revenues generated by the Franchisee's Southern Steer Business during the preceding Week ("Brand Fund Contribution"). The Brand Fund Contribution is Franchisor's exclusive property and will be used by Franchisor in accordance with Section 13. Franchisor is not required to separately account to Franchisee for the contributions or expenditures of the Brand Fund Contribution. Franchisor may increase, reduce or suspend the Brand Fund Contribution upon prior written notice.
(c) Additional Training Fee. If Franchisor provides additional training or additional opening assistance to Franchisee, Franchisee will pay Franchisor its then current additional training fee and any travel and living expenses incurred by Franchisor to conduct such additional training ("Additional Training Fee").
(d) Brand Conference Fee.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the Royalty Fee and Brand Fund Contribution are paid on different schedules. The Brand Fund Contribution, which is 1% of weekly gross revenues, begins the first week of the franchisee's required opening date and is paid weekly. The Royalty Fee, however, begins the third month after the franchisee's required opening date and is also paid weekly, based on the gross revenues generated in the preceding week.
For a prospective Southern Steer franchisee, this means carefully managing cash flow during the initial months of operation. While the Brand Fund Contribution starts immediately, the Royalty Fee is deferred for two months, providing some financial relief early on. However, franchisees must be prepared to meet both obligations starting in the third month. This payment structure is fairly typical in franchising, where franchisors often implement a ramp-up period for royalty payments to support new franchisees.
It's important to note that the Brand Fund Contribution can be increased, reduced, or suspended by Southern Steer with prior written notice. Franchisees should factor this potential variability into their financial planning. Additionally, the Royalty Fee is based on a percentage of gross revenues, so it will fluctuate with sales volume. Franchisees should also be aware of the definitions of 'Gross Revenues' and 'Required Opening Date' in the Franchise Agreement to fully understand their payment obligations.