What are net fees for The Standardx, and what reduces the gross fees to arrive at net fees?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- Net fees—Net fees represent gross fees reduced by key money assets amortization and performance cure payments, which constitute payments to customers.
Consideration provided to customers related to key money assets is recorded in other assets and amortized to Contra revenue over the expected customer life, which is typically the initial term of the management and hotel services agreement or franchise agreement.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, net fees are calculated by reducing gross fees. Gross fees include base management fees, incentive management fees, and franchise and other fees. The items that reduce the gross fees to arrive at net fees are key money assets amortization and performance cure payments, which are payments made to customers.
Key money assets are recorded as assets and then amortized to contra revenue over the expected customer life. This customer life typically aligns with the initial term of the management and hotel services agreement or the franchise agreement.
In simpler terms, The Standardx calculates its net fees by taking the total gross fees it earns and subtracting any amortization of key money assets and performance cure payments made to customers. This provides a clearer picture of the actual revenue The Standardx retains after accounting for these specific deductions.