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Considering an MOD Pizza Franchise? Don’t Overlook These 18 Important Franchise Fees

by Franchise Chatter on December 5, 2016

in Fast Casual Restaurant Franchise, Franchise Fees, Pizza Franchises



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Don't Invest in a Franchise Until You Check Out This List

MOD Pizza Interior

If you are considering an MOD Pizza franchise, don’t get blindsided by these 18 important franchise fees (from the initial franchise fee, to the royalty fee, to 16 other fees found in Items 5 and 6 of MOD Pizza’s 2016 FDD).

  • With the exception of the costs associated with Local Marketing, each fee is uniformly imposed by and payable by EFT to MOD Pizza.
  • All fees are nonrefundable.

1.  Initial Fee:  $30,000

  • If you sign a Franchise Agreement for a single MOD Pizza Restaurant, you will pay MOD Pizza an initial fee (“Initial Fee”) of $30,000.
  • You must pay the Initial Fee in full when you sign the Franchise Agreement. The Initial Fee is fully earned by MOD Pizza upon execution by you of the Franchise Agreement and is not refundable under any circumstances.
  • During its last fiscal year, which ended December 27, 2015, MOD Pizza collected Initial Fees of $30,000 each for 12 franchises.

2.  Development Fee:  $10,000 times the remaining number of MOD Pizza Restaurants that you agree to develop (after the first) under the Area Development Agreement

  • MOD Pizza may offer certain prospective franchisees the right to develop multiple Restaurants in a specified development territory (“Development Territory”). You secure these rights by signing an area development agreement (“Area Development Agreement”) with MOD Pizza, and committing to develop a defined number of Restaurants over a specific time period (“Development Schedule”).
  • If you sign an Area Development Agreement, you must pay the Initial Fee for the first Restaurant to be opened under the Area Development Agreement and pay a development fee (“Development Fee”) equal to $10,000 times the remaining number of MOD Pizza Restaurants that you agree to develop under the Area Development Agreement.
  • You will pay the Development Fee in full when you sign the Area Development Agreement. The Development Fee is fully earned by MOD Pizza upon execution of the Area Development Agreement by you as consideration for the exclusive rights you receive for the Development Territory and is not refundable under any circumstances even if you fail to develop any Restaurants under your Development Agreement.
  • You will sign a separate Franchise Agreement, in the then-current form being offered by MOD Pizza, for each MOD Pizza Restaurant you develop under the Area Development Agreement.
  • At the time you sign each subsequent Franchise Agreement, you will pay a reduced Initial Fee (“Development Franchise Fee”) equal to $20,000 for each MOD Pizza Restaurant.
  • The portion of the Development Fee allocated to each subsequent MOD Pizza Restaurant is not credited towards the Development Franchise Fee.
  • You must sign your first Franchise Agreement at the same time you sign the Area Development Agreement, and you will sign the remaining Franchise Agreements in accordance with the Development Schedule set out in the Area Development Agreement.
  • During its last fiscal year, which ended December 27, 2015, MOD Pizza signed three Development Agreements and collected Development Fees ranging from $120,000 to $270,000.

3.  Continuing Fees:  5% of weekly Revenues



  • Due Date:  Wednesday each week for the preceding week.
  • Payable each week after the Restaurant commences business; the term “Revenues” is defined in the Franchise Agreement as the total dollar sales for your Restaurant.
  • Excluded from the definition of Revenues are sales, use, or gross receipts taxes; gift card sales; or the one-time sale of any FF&E (i.e. Furniture, Fixtures, and Equipment) or inventory items.
  • If you sign an Area Development Agreement, then for the second and each subsequent Franchise Agreement you sign for the Restaurants you must develop under the Area Development Agreement, you will pay weekly Continuing Fees at the rate specified in the Franchise Agreement for your first Restaurant, even if the Continuing Fees in subsequent Franchise Agreements differ. You will pay all other fees in the amounts specified in each Franchise Agreement that you sign for the Restaurants you develop under the Area Development Agreement.
  • If you open a Restaurant before the Required Opening Date, you will pay Continuing Fees at 50% of the standard rate (2-1/2% of your weekly Revenues) for the period of time from your actual opening date until the Required Opening Date, up to a maximum of 12 weeks.

4.  Marketing Fees:  1.5% of weekly Revenues (can be increased up to 3% on 90 days’ written notice).

  • Due Date:  Wednesday each week for the preceding week.
  • Deposited in the advertising and marketing fund (the “Marketing Fund”) controlled by MOD Pizza.
  • MOD Pizza reserves the right to collect Continuing Fees and Marketing Fees on a four-week “Accounting Period” or other basis upon written notice to you.

5.  Audit Fees:  amount incurred by MOD Pizza to audit your MOD Pizza Restaurant business; estimated to range from $2,000 to $5,000

  • Due Date:  Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
  • Payable only if an audit shows that you understated your Revenues by more than 2% in any month, quarter, or year.

6.  Transfer Fee:  30% of the then-current Initial Fee for a single MOD Pizza Restaurant

  • Due Date:  60% of the Transfer Fee is paid with request for transfer approval and is not refundable; the balance is paid on or before the date of the transfer.
  • You must obtain MOD Pizza’s prior approval for a transfer.

7.  Collection Costs:  amount incurred by MOD Pizza to collect unpaid fees

  • Due Date:  On demand.
  • Includes attorneys’ fees and related costs.

8.  Administrative Fee:  $50

  • Due Date:  On demand.
  • Applies to past due payments payable to MOD Pizza.

9.  Interest Charges:  the lesser of 18% per annum or the maximum legal rate allowable by applicable law

  • Due Date:  On demand.
  • Applies to past due payments payable to MOD Pizza.

10.  Opening Team Fee and Expenses:  up to $500 per person, per day, plus Travel Expenses

  • Due Date:  Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
  • Payable in connection with the opening of your third and any subsequent Restaurant.

11.  New Management Staff Training:  $500 per day, plus Travel Expenses

  • Due Date:  Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
  • Payable if you hire new Management Staff employees; Travel Expenses are payable if training is provided at your Restaurant.
  • “Travel Expenses” include all costs incurred for travel, transportation, food, lodging, telephone calls, automobile rental, and all other related expenses.

12.  On-site Training or Consulting Fees:  $500 per day, plus Travel Expenses

  • Due Date:  Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
  • Payable if MOD Pizza conducts additional training at your Restaurant, you need additional days of opening assistance, or you request that consulting assistance be provided at your Restaurant.

13.  Relocation Fee:  30% of the then-current Initial Fee for a single MOD Pizza Restaurant



  • Due Date:  60% of the Relocation Fee is paid when you request review of a new site; the balance is paid on the date you receive approval from MOD Pizza to relocate the Restaurant to a new Franchised Location.
  • Payable only if you request and receive approval from MOD Pizza to relocate the Franchised Location.
  • You will sign the then-current Franchise Agreement for a full franchise term as provided in the Franchise Agreement.
  • You will also pay MOD Pizza a minimum Continuing Fee of $500 per week during the time your Restaurant is closed during the relocation process.
  • If your Restaurant is closed for longer than a week as a result of a casualty or for any other reason, you must pay MOD Pizza a minimum Continuing Fee of $250 per week.

14.  Reacquisition Fee:  30% of the then-current Initial Fee for a single MOD Pizza Restaurant

  • Due Date:  When you sign a new Franchise Agreement.
  • Payable only if, after the expiration of your Franchise Agreement, you meet all requirements and reacquire the franchise for your MOD Pizza Restaurant.

15.  Local Marketing:  minimum of 2% of Revenues (1.5% of aggregate Revenues if you operate more than one MOD Pizza Restaurant)

  • Due Date:  Payable to suppliers as incurred.
  • You must spend at least 2% of your Revenues on approved Local Marketing.
  • When there are two or more MOD Pizza Restaurants in your Designated Market Area (“DMA”), you may be required to contribute Local Marketing Fees up to 2% of your Revenues to a local marketing group (the “Local Marketing Association”).
  • Local Marketing Fees will be applied to your 2% Local Marketing requirement.

16.  Review of Unapproved Supplier:  you must reimburse MOD Pizza for the expenses it incurs inspecting or evaluating an unapproved supplier, estimated to range from $1,500 to $5,000

  • Due Date:  Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
  • Payable only if you request that MOD Pizza review and approve a previously unapproved supplier.

17.  Registration Fees:  then-current registration fee for the event; MOD Pizza does not currently charge any registration fees, but may in the future charge a fee of up to $500 per person

  • Due Date:  When you register for a convention, meeting, seminar, franchisee gathering, or other group session.
  • Your MOD Operator and all other individuals designated by MOD Pizza will attend each group event held by MOD Pizza.
  • MOD Pizza will determine the topics covered, duration, dates, and locations of all such events.

18.  Indemnification:  will vary under the circumstances

  • Due Date:  Upon demand.
  • You must indemnify MOD Pizza for claims arising out of the operation of your Restaurant.


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