Other Publications

23.1 Initial fee

23.1.1 In consideration of the rights to use the Franchisor’s System, the Franchisee shall pay the Franchisor an initial franchise fee of _______ (hereinafter referred to as the Initial Fee).

Often, franchise relationships require the franchisee to pay some type of initial franchise fee, which, in most cases, is really viewed as an “entrance fee” or “admission ticket” for rights to use the franchisor’s systems and trademarks. Such entrance fee or admission ticket is essentially to defray the franchisor’s initial training and recruitment costs.

23.1.2 The Initial Fee will be paid by the Franchisee to the Franchisor at the time of the signature of this Contract. The Initial Fee shall be deemed earned upon receipt by the Franchisor and is non-refundable.

However, it may be provided that the initial fee be refunded less the franchisor’s expenses if the franchisee does not meet reasonable minimum standards of operation of the business following the initial training.

23.2 Royalties

23.2.1 In consideration of the rights granted herein, the Franchisee shall pay the Franchisor a royalty equal to ____ % of the Gross Sales.

23.2.2 The royalties shall be paid _________ (weekly/monthly/quarterly). Within 7 days after the end of such period, the Franchisee shall deliver to the Franchisor a true and accurate statement of the Gross Sales for the period and the amount of corresponding royalties, which are immediately due.

In certain jurisdictions it may be desirable to refer to this ongoing fee as “management fee” or “service fee” instead of “royalty” as this latter terminology may have adverse tax effects.

²⁸23.2.3A The total amount of royalties due for any payment period shall not be less than ____ (hereinafter referred to as the Minimum Royalty) as will be adjusted every year at the anniversary of the signature of this Contract in accordance with the index specified in Annex 6 without need for any prior notice.

23.2.3B The total amount of royalties due for any twelve-months period shall not be less than ____ (hereinafter referred to as the Minimum Royalty) as will be adjusted every year at the anniversary of the signature of this Contract in accordance with the index specified in Annex 6 without need for any prior notice.

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23.2.4 In case the royalties calculated according to Article 23.2.2 are less than the Minimum Royalty, the Minimum Royalty shall be paid.

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