This is way to complex to analyze without seeing the agreement. The client has a right to fee arbitration probably can't be waived, but this appears to be quite unusual. Percentage of gross incoming income and the relation of that amount to "royalties" is very unclear. It shouldn't take more than an hour or two for a lawyer to review the agreement and reply in detail to your concerns and seek clarifications from the attorney who may represent you, if necessary.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
Sorry you should take the agreement to another attorney, way to complex to give you any advice, I do agree with my colleague above that you are entitled to Mandatory Fee Arbitration with the Cal. State Bar regardless of retainer.