Royalty Exemptions feature allows your Franchisees to exclude certain Products or Services from Royalty fee depending on your contract.
Royalty Exemptions are set on the product and needs to have a document, that proves that this should be an Exempt, attached. However, every time when this product is added to an invoice, the Exemption has to be approved by the Franchisor. Otherwise, it will not be excluded from the Royalty fee.
Royalty Exemptions feature is NOT a default feature and if you want this enabled in your Franchisee company account, you need to to go to your Companies section and select the company which settings you want to edit:
The Company Details page will open and you need to navigate to the Royalty Settings section. Press the Edit button to see the Royalty settings:
The pop-up window will open where you can see the Exempt Sales field. You need to press the button to enable the Royalty Exemptions feature and click Save:
Right now, when the Royalty Exemptions are enabled, your Franchisee is able to set a Product or Service as an Exempt.
The Franchisee needs to sign in to their Company account and either create a new Product or Service, or edit the Existing one. When they press the Edit button on the Product or Service record, the pop-up window appears. They need to press the button at the Royalty Exempt section to turn it on and click Save:
When the Product or Service is set as Royalty Exempt, they need to upload a document that justifies the Royalty Exemption. If there are no documents uploaded, the warning message appears at the top or the Product or Service record to remind them to upload the document.
Without documentation, the product cannot be Royalty Exempt.
To upload a document, the Franchisee needs to navigate to the Royalty Exempt Documentation section and press the universal add button (+):
This button opens a pop-up window where they need to enter the Name of the document and upload a document. They can also add the Description for this document, but it's optional:
When the Franchisee clicks Save, the document with its Name and Description appears under the Royalty Excempt Documentation section and the warning message at the top of Product/Service record disappears.
When the Product or Service is marked as a Royalty Exempt and the Franchisee adds it to the invoice, in the Invoice Items section it appears as until you as a Franchisor approve the invoice line item. Keep in mind that marking the Product or Service as Royalty Exempt, does not automatically exclude this item from the Royalty fee. Every time the item is added to the invoice it has to be approved and documented.
Also, in the Invoice Details page, appears the section Royalty Exempt Documentation, where the Franchisee can view the documents attached to the Royalty Exempt request, edit those documents or add some new ones:
To add a new document, they need to press the universal add button (+) and upload a file. However, this file will be added only to the invoice they're editing. It will not appear under the Product or Service record.
To approve the Royalty Exemption, you as a Franchisor need to login to your account and in the Actions section you will see a red label with a number of actions that require your attention. Navigate to this section and select Exemptions:
Here you will see a list of pending Exemptions that are waiting for your approval:
You can review the Exemptions documentation in the Link column, filter the grid by company or the Exemption status. The default view is where you see all the pending status Exemption requests, from all of your child companies.
The 'Edit' button opens the Invoice Details page where the Exemption was requested and in the Royalty Exempt Documentation section you can edit the document, approve, decline or delete the documentation:
In the Exemptions list you can either approve/decline the Exemptions one by one, or use the bulk actions functionality:
If you decline the Exemption, the pop-up window appears where you need to write the Decline reason:
When you decline the Exemption, in your your Franchisee's menu Actions section, a red label with the number of actions appears:
It shows the number of the declined Exemption requests. In the grid they can press the 'Edit' button:
The 'Edit' button opens the Invoice Details page and in the Royalty Exempt Documentation section they can upload a new document or delete the existing one:
The important part is that if there is more than one Document related to the same Invoice Item, all of those Documents have to be approved. If there is at least one Document with pending status, the Invoice Item stays with a pending status. If there is at least one Document with a declined status, the Invoice Item has a status declined:
In order for the Item to have the status approved, all related documents have to be approved by you as a Franchisor:
However, if they edit an already approved document, the status becomes 'pending' again and you as a Franchisor have to approve it again.
In the Royalty Report, the Royalty Exempt Sales are separated from Net Sales, and Royalty fee is calculated from Net Sales, excluding the Exemptions:
The important part is that the Exempt Sales are calculated not from the Invoices, but from the applied payments. If in the current Royalty Report period there is only a partial payment for the invoice which has Royalty Exemptions, the Exempt Sales are calculated from the Payment amount based on how many percents of the Sale consist of the Royalty Exempt. If the rest of the payment is applied in the next Royalty Report period, the part of this payment according to the percentage will appear in the next Royalty Report.