How are royalty fees calculated for a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
33%); two Southern Steer Businesses met or exceeded the Net Income before Owner's Compensation (Sarasota) set out in Chart 5B (66.66%) and three Southern Steer Businesses met or exceeded the Net Income before Owner's Compensation (Ocoee) set out in Chart 5C (100%).
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- "Gross Sales" is defined as total revenue derived from selling products and services, including meats and cheeses, prepared meals, grocery and dry goods and wine and beer. It does not exclude Loyalty Customer Discounts, which are deducted in Miscellaneous Expenses.
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- "Gross Profit" is calculated by deducting the total Cost of Goods Sold from the total Gross Revenue.
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- "Net Income Before Owner's Compensation" is calculated by deducting from the Gross Sales, the Cost of Goods Sold, Total Operating Expenses and Franchise Fees described in each chart. It does not include deductions for income taxes, payroll taxes, travel expenses, owner benefits, employee benefits, bonuses, amortization, interest payments, owner's compensation, and disability and health insurance.
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- "Labor Costs" includes the wages to hourly employees, managers and assistant managers. Labor costs do not include the salaries for any general managers, administrative staff, payroll taxes or benefits (such as bonuses or insurance). You may elect to manage the day-to-day operations of a Southern Steer Business and operate with fewer employees.
Source: Item 19 — ITEM. 19 FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 50–58)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, royalty fees are calculated based on Gross Sales minus Loyalty Customer Discounts. Gross Sales is defined as the total revenue derived from selling products and services, including meats and cheeses, prepared meals, grocery and dry goods, and wine and beer. Loyalty Customer Discounts are deducted from Gross Sales before calculating the royalty fees.
For example, the 2024 Reporting Period for the Clearwater, Florida location had imputed royalty fees of $111,183.30, which represented 5.11% of Gross Sales. In Sarasota, the royalty fees were $29,818.67, representing 1.83% of gross sales, while in Ocoee, the royalty fees were $61,886.28, representing 3.98% of gross sales. These figures illustrate how royalty fees can vary based on location and sales performance.
It's important to note that these imputed expenses, including royalty fees, are based on rates set out in Item 6 of the Franchise Agreement. These calculations are illustrations and are not actually paid to Southern Steer in the context of the financial performance representation. Prospective franchisees should carefully review Item 6 of the FDD and the Franchise Agreement to fully understand the royalty fee structure and how it applies to their specific circumstances. Understanding the calculation and potential impact of royalty fees is crucial for assessing the financial viability of a Southern Steer franchise.