Item 6 is a Table of all other fees imposed and collected by the franchisor throughout the life of the franchise agreement. This includes any niche charges, late fees, indemnification, etc. In some instances where the fee can be variable, you will want to list both an upper and lower limit.
We encourage you to be thoughtful and intentional when laying out these fees. Once your brand starts to expand nationally, these fees will be scrutinized by state examiners who regularly push back on open-ended fees. Open-ended fees are also subject to push back from attorneys hired by your prospective franchisees. It is better, when constructing this chart, to be as clear and unambiguous as possible.
Sample Item 6
ITEM 6: OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty (note 1) | 4% of total gross sales | Payable monthly on the 10th day of the next month | Gross sales include all revenue from the franchise location. Gross sales do not include sales tax or use tax. |
| Advertising (note 1) | 2% of total gross sales. | Same as royalty fee | |
| Cooperative Advertising (note 1) | Maximum – 2% of total gross sales | Established by franchisees | Franchisee may form an advertising cooperative and establish local advertising fees.
Company-owned stores have no vote in these cooperatives. |
| Additional Training (note 1) | $1,000 per person | Two weeks prior to beginning of training | Belmont trains two persons free. See Item 11. |
| Additional Assistance (note 1) | $500 per day | Thirty days after billing. | Belmont provides opening assistance free. See Item 11. |
| Transfer (note 1) | $1,000 | Before the transfer. | Payable when you sell your franchise. No charge if franchise transferred to a corporation that you control. |
| Audit (note 1) | Cost of audit plus 10% interest on
underpayment (note 2). |
Thirty days after billing. | Payable only if audit shows an understatement of at least 2% of gross sales for any month. |
| Renewal Fee (note 1) | $1,000 | Thirty days before renewal. |
Note 1: All fees are imposed by and are paid to Belmont. All fees are non-refundable.
Note 2: Interest begins from the date of the underpayment.
This is a sample section from a fictional FDD for Belmont Muffler Shops that was prepared by the Federal Trade Commission as a compliance guide for franchisors preparing their FDD. These are used to provide an idea of what these items may look like in an FDD, but keep in mind, your FDD will most likely vary significantly from these examples.
