Franchise Agreements, Cash Flow and Royalty Payments

One of the biggest concerns in franchising for aPayments of continuing royalty fees are not
franchise company is cash flow. And that means arefundable and must be made via bank wire or such
franchisor must pay careful consideration to royaltyother electronic funds transfer procedure as
payments from its franchises and franchise outlets.Franchisor may require.The royalty fee may not be
Not only is it important to receive the money, but it alsouniform for all franchises now being offered by the
is smart to make sure that the money is due, whenfranchisor. Franchisor reserves the right to trade
the franchisee can pay it and when the franchisingservices for royalties upon our mutual consent.
company will need it. If a franchisor collects its royaltiesFranchisor reserves the right to administer National and
at the end of the month, when rent is due then theInternational accounts and collect all monies. Franchisor
franchisee may have to choose between rent ormay subtract out the royalty fees and/or the
royalties.In carefully considering the cash flow wepromotional fund fees that Franchisee pays Franchisor
needed for our franchising company and the ability ofbefore forwarding any monies due the Franchisee.
our franchises to pay the fees owed, we modified ourPayments to the Franchisee will be settled
franchise agreements to best fit solving this issue formonthly.-------- ------------ -----------As they say; cash is
all parties concerned. Below you will find a copy of theking. Every franchising company needs cash to
clause that I inserted into each and every franchiseaccelerate faster and faster into the market as they
agreement;2.2 Continuing Fees2.2.1 RoyaltiesTheextend their brand-name and grow their companies.
royalties for each truck/unit will be $100.00 per month.And it is not easy to manage a rocketship. All
This royalty fee is due and payable in full on thefranchisors would be well advised to consult with a
seventeenth (17th) calendar day of each calendarCPA and an experienced franchising attorney to best
month. These royalty payments are to be paid forstrategize how to accomplish this goal. I hope you will
every truck and trailer unit Franchisee operates.consider this in 2006.