If you are considering a Cruise Planners franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Cruise Planners’ 2016 FDD).
1. Initial Franchise Fee: $495 to $10,495
- You (and all other franchisees who sign the Franchise Agreement presented in the Franchise Disclosure Document) will, upon initially signing the Franchise Agreement, pay a one-time nonrefundable franchise fee in a lump sum. All franchise fees are fully earned by Cruise Planners when you sign the Franchise Agreement.
- You must satisfactorily complete Cruise Planners’ initial training program. If you have not yet attended the initial training and/or started business, Cruise Planners may refund, at its discretion, up to 35% of the initial franchise fee if you want to terminate your Franchise Agreement and sign its standard form of general release.
- The amount of the initial franchise fee varies depending upon Cruise Planners’ assessment of your experience and the amount of commissions you have earned (based on information acceptable to it provided directly by the cruise lines and such other information as it deems relevant). Cruise Planners determines your experience level in its sole discretion.
- $10,495 (initial franchise fee) – Inexperienced Travel Agent (No previous travel agent experience).
- $3,900 (initial franchise fee) – Minor Experienced Travel Agent (Holder of an International Air and Travel Agent Network card (“IATAN”) or a Cruise Line International Association certificate (“CLIA”) or travel sales experience Cruise Planners deems satisfactory and appropriate for intermediate experience coupled with at least $5,000 in earned commissions for the last calendar year or other sales or other experience Cruise Planners feels suitable for an intermediate experienced agent).
- $495 (initial franchise fee) – Major Experienced Travel Agent (Holder of an IATAN or a CLIA card and travel sales experience Cruise Planners deems satisfactory and appropriate for a high level of experience coupled with $100,000 or more of Gross Commissionable Revenues during the previous 12 months or at least $5,000 in earned commissions for the last calendar year or other sales or other experience Cruise Planners feels suitable for a high level experienced agent).
- Major Experienced Travel Agents must have their own preexisting client list to use in their Cruise Planners business.
- The initial franchise fee is uniform in all cases for each category of franchisee, except for Major Experienced Travel Agents.
- From time to time, Cruise Planners may offer rebates or reductions in the initial franchise fee based on minimum performance or other appropriate criteria.
- Cruise Planners reserves the right to vary the amount of the initial franchise fee and other initial payments depending upon the qualifications, experience level, and other resources available to the franchisee. This includes the initial franchise fee as well as training fees.
- During 2015, the initial franchise fees paid ranged from $0 to $10,495.
- If a Major Experienced Travel Agent does not meet $100,000 in cruise Gross Commissionable Revenues during his or her first year, Cruise Planners can terminate the Franchise Agreement.
- Cruise Planners currently participates in the IFA’s VetFran program. It offers a $1,000 discount off the initial franchise fee for Inexperienced Travel Agents who are qualified U.S. military veterans.
- Cruise Planners may finance a portion of the initial franchise fee for Inexperienced Travel Agents qualified applicants. Qualified applicants must pay $5,500 towards the initial franchise fee, pay a $200 non-refundable application and processing fee, and, if approved, sign a promissory note for the balance upon execution of the Agreement.
2. Errors and Omissions Insurance: $165 per person per year
- You must purchase your errors and omissions insurance (“E&O Insurance”) through Cruise Planners at the current premium rate (presently $165 per person per year). E&O Insurance covers you from liability to customers for mistakes you might make when booking travel for them.
- Your first annual E&O Insurance premium is part of your initial franchise fee. It is nonrefundable.
- Each person in your franchise needs to purchase E&O insurance through Cruise Planners, including any co-owner of the franchise.
- Cruise Planners uses these fees to reimburse itself for the policy premiums it pays the insurer for the insurance coverage and for its administrative costs.
3. Annual Access Fee: $60 per person per year
- Each person in your franchise must have a separate login and password for website access. Each person in your franchise will be assessed an annual access fee to offset a portion of Cruise Planners’ investment in technology. This fee is currently $60 per person per year, and it is nonrefundable.
- Cruise Planners will waive this access fee for one person in your franchise per year.
- Cruise Planners will pay out of Commissions if available; prorated refund if person leaves during the year.
4. Training Fee: $0 to $695 per person
- Cruise Planners does not charge you a separate training fee for your initial training if you are an Inexperienced or Minor Experienced Travel Agent. It will provide hotel accommodations for all Inexperienced or Minor Experienced Travel Agents attending initial training.
- If, however, you do not attend training within the first two training cycles after the Effective Date of your Franchise Agreement, Cruise Planners may charge you the cost difference if the hotel room rate increases.
- If you are a Major Experienced Travel Agent, Cruise Planners charges for your initial training (currently $695 per person). This does not include hotel accommodations. It is nonrefundable.
- Cruise Planners also charges for the initial training of your associates (currently $695 per person). This does not include hotel accommodations.
- These training fees are nonrefundable.
5. Referral Bonus
- Cruise Planners pays a referral cash bonus to franchisees that refer to it prospects who then buy franchises from it and pay its initial franchise fees. The referral must be in writing and not previously known or solicited by Cruise Planners.
6. Royalty: 1% – 3% of Gross Commissionable Revenues depending on the commissionable rates paid by the Travel Supplier
- Due Date: 1st and 15th day of each month.
- Cruise Planners nets the royalty from your Gross Commissionable Revenues and sends you the balance. Incentive programs are sometimes available for achieving certain volume levels.
- “Your Gross Revenue” means all commissions derived from Gross Commissionable Revenues. Discounts given by you to customers will not be considered with respect to Your Gross Revenue.
- “Gross Commissionable Revenues” are the gross amounts quoted by cruise lines companies (or other travel companies) (“Travel Supplier(s)”) for cruise and/or travel packages, including, without limitation, cruises, tours, lodging, car rentals, airline tickets, vacation packages, ground transportation arrangements, and travel insurance (“Cruise and Travel Product(s)”) purchased with or without a cruise, while operating the Cruise Planners franchise in accordance with the Cruise Planners system standards, but excluding all federal, state or municipal sales taxes, use taxes, or service taxes collected from customers and paid to the appropriate taxing authority.
- Refunds, adjustments, credits, and allowances actually made by you in compliance with Cruise Planners system standards shall be excluded from Gross Commissionable Revenues.
- You may not keep cash or checks paid to you. All monies collected by you must be paid by money order or certified checks payable to Cruise Planners and forwarded to it immediately following your receipt of same.
- Cruise Planners will net the Royalty Fee and any other amounts due to it and remit the remainder of the Commissions earned from your Gross Commissionable Revenues on the 1st and 15th day of each month if you have recorded the reservation on Cruise Planners’ CRM (customer relationship management) system, after the customer’s departure on his or her booking, and after Cruise Planners receives the commission payment in full from the Travel Supplier.
- Cruise Planners will remit payments to you on the 15th day of the month for Commissions meeting all 3 of these requirements (reservation recorded, booking departed, and payment received) between the 1st and 14th day of the same month, and on the 1st day of the subsequent month for Commissions meeting all 3 of these requirements (reservation recorded, booking departed, and payment received) between the 15th and last day of the month.
- You will forfeit any Commissions Cruise Planners has held for you for any 6-month period if you do not properly record the bookings onto its CRM system during that time.
- The royalty percentage is based on the percentage of Gross Commissionable Revenues that varies depending on the commissionable rate paid by the Travel Supplier as follows:
- (a) for commissionable rates of 6% or more, the royalty is 3%;
- (b) for commissionable rates of less than 6%, the royalty is 1.5%;
- (c) for achieving certain sales volume levels the royalty may be reduced to 1%; and
- (d) if you violate the franchise agreement and do not record travel using the Cruise Planners CRM system, you may have to pay Cruise Planners a royalty fee of 10% of the Gross Commissionable Revenues for such bookings due immediately on notice from it.
- If you inform Cruise Planners of such bookings prior to its discovery of them, then it will not charge the extra 7% royalty and only the 3% or 1.5% royalty, as appropriate, will be due on the 15th day of the month following your receipt.
7. Annual Maintenance Fee: $0 to $2,000 per year – amount varies depending on your initial franchise fee, your Gross Commissionable Revenues, and the number of years you have been a franchisee
- Due Date: On the anniversary of your franchise; the 3rd year annual maintenance fee is due if you renew.
- Amount varies.
8. Technology Services Fee: currently $59 per month
- Due Date: Payable monthly via your credit card on file with Cruise Planners.
9. Franchise Transfer Fee: $10,495 maximum
- Due Date: Payable when the transfer takes place.
- Cruise Planners’ reasonable transfer and training fees to cover its costs associated with documenting the transfer, approving and training your transferee.
10. Returned Check Fee: $50 per check
- Due Date: When you make good on the returned check which you must do within 7 days of the notice of default.
11. Relocation/Ownership Fee: currently $195
- Due Date: When Cruise Planners approves your relocation or change in owner’s legal entity.
12. Administrative Fee for an Additional Associate: $50 one-time charge for each associate
- Due Date: As incurred.
- Only charged if you add additional associate(s).
13. Background Check Fee for an Additional Owner or Associate: $50 one-time charge for each additional owner or associate
- Due Date: As incurred.
- Cruise Planners conducts a background check on you, your owners, and your associates.
- One background check is done at Cruise Planners’ expense. The fee is only charged if you have more than one owner or add additional associate(s).
14. Associate Training Fees: currently $695
- Due Date: Prior to training.
15. Additional Training Fee: currently $495 to $695
- Due Date: Prior to seminar date.
- $495 is the fee for franchisees who elect to re-take the training and does not include lodging.
- $695 is the cost per person for the seminar for a converting Experienced Travel Agent and any owners or associates attending the training.
- Airfare is not included in any of the foregoing amounts. These amounts are subject to change upon written notice from Cruise Planners.
16. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You have to reimburse Cruise Planners if it is held liable for claims arising from your operation of your franchised business.
17. Costs and Attorneys’ Fees: will vary under circumstances
- Due Date: As incurred.
- You are responsible for Cruise Planners’ costs and attorneys’ fees if it incurs them in any litigation proceeding in which it prevails or if it has to obtain an injunction against you.
- Cruise Planners cannot estimate what these amounts will be as they vary due to numerous factors including the types of claims and defenses, the nature of the defenses, the length and complexity of the case, the fees charged by attorneys and experts, the venue of the dispute, and any associated costs and expenses.
18. Domain Name Change Fee: currently $75, plus $20 per year, if your domain name is re-directed
- Due Date: As incurred; yearly payments will be made for so long as Cruise Planners re-directs the domain name.
19. Dedicated Business Telephone Number Change Fee: currently $195
- Due Date: As incurred.
- Only charged if change is made 90 days after Effective Date of the Franchise Agreement.