Franchise Operations, Reporting and Royalties

This page explains how an operating franchise reports sales, pays royalties and fees, contributes to the marketing fund, and meets audit and brand standards, and how renewal, transfer, and termination work. This page summarizes the Franchise Fees & Royalties Policy, which governs.

Reporting: your information duty

You report gross sales for each reporting period: weekly or monthly, as your agreement states: through the Platform's reporting. The Platform verifies reported figures against payment-processing records; reporting is not self-certification on trust alone.

• Gross sales is the royalty base. Its definition: including whether gift-card sales, refunds, and taxes are included or excluded: is set in your agreement. Confirm the definition in writing before you sign; do not assume your understanding matches the Platform's.
• The report is due on schedule whether sales were strong or not. A missing report is itself a compliance matter, separate from what the numbers would have shown. Late reporting follows the same notice process as late payment.
• Records support the report. Keep the underlying records: point-of-sale exports, bank deposits, and tax filings: for the retention period stated in your agreement.

Royalties and fees: how payment works

The fee structure is governed by the Franchise Fees & Royalties Policy, which governs

• Initial franchise fee: one-time, due on signing, and non-refundable except as the agreement provides.
• Royalty: the ongoing fee for the license and the system, calculated on gross sales at the royalty rate in your agreement.
• Marketing fund contribution: collected alongside royalties, accounted for separately, and governed by the Franchise Marketing Fund Policy.
• Other fees: transfer fee, renewal fee, audit-cost reimbursement, training fees, technology fees, and late charges, each as the fee schedule in your agreement states. No fee is charged that is not in the agreement or the fee schedule.

The amount or rate for each item above is a commercial term stated in your individual agreement.

Collection

Collection runs by ACH debit or by deduction against your connected payouts, on the schedule your agreement states. Requirements

1. Maintain a valid payment method.
2. Maintain sufficient collected funds for each scheduled collection.

If a collection fails, the sequence is

1. Notice is given at 3 business days.
2. A second collection attempt is made at 7 business days.
3. Late charges accrue from the original due date, as the agreement provides.

Royalties and marketing fund contributions are accounted for separately. The Company does not offset one against the other.

Fee disputes and non-payment

1. Raise a fee dispute in writing within 30 days of the statement.
2. Pay undisputed amounts on schedule while the dispute is open.

Non-payment beyond 30 days past due is a material breach. Non-payment beyond 60 days past due is grounds for termination proceedings, subject to notice and an opportunity to cure. Termination for non-payment follows the Franchise Termination Policy, which governs; it does not happen by informal notice.

The marketing fund

The marketing fund is the franchisees' collective advertising money, governed by the Franchise Marketing Fund Policy, which governs

• Separate accounting. Fund money is not the Company's operating revenue. It is held separately and spent on marketing.
• Annual reporting. Franchisees receive an accounting of how the fund's money was spent. If you contribute to the fund, you are entitled to see the spending.
• No cross-subsidy. Your contribution funds system marketing. It does not fund another franchisee's local shortfall or the Company's general expenses.

Audits and brand standards

The Company audits. Audit and inspection rights, including inspection of financial records and the physical location, are governed by the Franchise Audit & Inspection Policy, which governs. Underreporting found on audit is assessed with interest, and audit costs are allocated to the franchisee above the threshold stated in the policy. Keep accurate books and an audit is a routine review.

Brand standards cover the customer-facing consistency the franchise system offers: signage, interior, uniforms, service protocols, and customer experience, governed by the Franchise Brand Standards Policy, which governs. Inspections check compliance.

Training is ongoing, not only initial. New programs, new products, and refresher requirements are delivered through the learning portal and completion is tracked, governed by the Franchise Training Policy, which governs.

Renewal, transfer, and termination

• Renewal. Your agreement has a term, and the end of the term is a process. Renewal conditions, any renewal fee, and the timeline are stated in your agreement and governed by the Franchise Renewal Policy, which governs.
• Transfer. Selling your franchise to another person requires Company approval, with a right of first refusal and an approval schedule, governed by the Franchise Transfer Policy, which governs. The buyer must qualify in the same way you did.
• Termination. Termination follows the Franchise Termination Policy, which governs: cure periods for breaches that can be cured, and immediate termination only for the causes listed there.

Disputes between the Company and a franchisee follow the path in the Franchise Dispute Resolution Policy, which governs: negotiation, then mediation, then arbitration. The marketplace's general dispute process does not apply to franchise disputes, because the franchise agreement is its own legal relationship.

Diligence for prospective franchisees

Before you commit

1. Read the agreement offered to you in full.
2. Confirm every figure is in the agreement itself, not only in conversation.
3. Have your counsel review the Franchise Disclosure Document.
4. Ask the Company directly about the timeline to first opening.