What is the royalty rate for Southern Steer franchisees with annual sales under $1 million?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
for clients investing in a t least 3 locations.
Royalty Payments
The Company also earns royalties based on gross revenue of its franchisees, ranging from three to five percent. The royalty rate schedule is regressive, computed as 5% for annual sales under $1MM, then dropping to 4% for additional sales up to $2M
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the company earns royalties based on gross revenue of its franchisees. The royalty rate is regressive, meaning it decreases as sales increase. For Southern Steer franchisees with annual sales under $1 million, the royalty rate is 5%.
This means that if a franchisee's annual gross revenue is $900,000, they will pay 5% of that amount, or $45,000, to Southern Steer as a royalty fee. This regressive structure incentivizes franchisees to increase their sales, as the percentage paid in royalties decreases at higher revenue levels.
Prospective franchisees should carefully consider this royalty structure and factor it into their financial projections. Understanding the impact of royalties on profitability is crucial for assessing the viability of a Southern Steer franchise.