Common use of Minimum Performance Standards Clause in Contracts

Minimum Performance Standards. a. In the first Franchise Year (does not apply to Renewals), Franchisee is required to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee of $2,500.00 (approximately $31,250.00 of Gross Sales). In the second Franchise Year (does not apply to Renewals), Franchisee is required to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee of $5,000.00 (approximately $62,500.00 of Gross Sales). In the third and subsequent Franchise Years (including each Franchise Year during any Renewal period), Franchisee is required to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee each Franchise Year of $10,000.00 (approximately $125,000.00 Gross Sales per year) in order to retain the rights granted herein by V2K. b. If Franchisee qualifies for, and pays, the Small Market Franchise Fee, instead of the amounts listed in the preceding paragraph, Franchisee is required in the first Franchise Year (does not apply to Renewals) to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee of $1,250.00 (approximately $15,625.00 of Gross Sales). In the second Franchise Year (does not apply to Renewals), Franchisee is required to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee of $2,500.00 (approximately $31,250.00 of Gross Sales). In the third and subsequent Franchise Years (including each Franchise Year during any Renewal period), Franchisee is required to produce a minimum volume of Gross Sales sufficient to produce a Minimum Royalty Fee each Franchise Year of $5,000.00 (approximately $62,500.00 Gross Sales per year) in order to retain the rights granted herein by V2K. c. In any situation, if Franchisee has under this Agreement one or more Areas of Primary Responsibility with a total of more than 60,000 households, the volume of Gross Sales Franchisee must produce will be increased proportionally for each household over 60,000. d. In any case, the Minimum Royalty Fee may, at V2K's option, be adjusted by V2K once per year. The percentage increase (if any) may not exceed the U.S. Consumer Price Index (for U.S. City Average, All Items Index, All Urban Consumers) percentage increase for the prior 12-month period. e. Failure to produce sufficient annual Gross Sales in any given year, so as to produce at least the Minimum Royalty Fee, may result in loss of Franchisee's Area of Primary Responsibility, transfer of Franchisee by V2K to Inactive Status (as specified in SECTION 5.1.G above), and/or termination of this Agreement, at the option of V2K; unless Franchisee pays V2K the Minimum Royalty Fee for that year.