How often are incentive fees billed and collected at a minimum for The Standardx?

According to The Standardx's 2025 Franchise Disclosure Document, incentive fees are linked to the achievement of specific profitability targets. The Standardx recognizes these fees when it's probable that a significant portion of them won't be reversed in a later period, using internal financial forecasts and historical trends to estimate the amounts and likelihood of reversal. Base management and hotel services fees are typically due monthly as services are provided. However, incentive fees are due and payable according to the terms of the agreement, but must be billed and collected at least annually.

For a prospective franchisee, this means that while base fees provide a consistent monthly revenue stream for The Standardx, incentive fees are more variable and depend on the hotel's performance. The franchisee needs to understand the specific profitability targets in their agreement, as these will directly impact when and how much in incentive fees The Standardx can collect.

The annual minimum billing and collection frequency for incentive fees suggests that The Standardx assesses performance and calculates these fees no less than once a year. This could affect the franchisee's cash flow, as a significant portion of fees could be tied to the year-end performance review. Franchisees should clarify the exact timing of these billings and collections to manage their financial planning effectively.

Understanding the terms for incentive fee calculation and payment is crucial for any potential The Standardx franchisee. It is important to review the specific agreement details to fully grasp the conditions under which these fees are assessed and collected, ensuring there are no surprises in the financial management of the franchise.