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