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Considering a Boston’s Pizza & Sports Bar Franchise? Don’t Overlook These 21 Important Franchise Fees

by Franchise Chatter on February 27, 2017

in Franchise Fees, Pizza Franchises, Restaurant Franchise, Sports Bar Franchise

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

Boston's Restaurant & Sports Bar Exterior Photo

If you are considering a Boston’s Restaurant & Sports Bar franchise, don’t get blindsided by these 21 important franchise fees (from the initial franchise fee, to the royalty fee, to 19 other fees found in Items 5 and 6 of Boston’s Restaurant & Sports Bar’s 2016 FDD).

1.  Initial Franchise Fee:  $50,000

  • You must pay a $50,000 initial franchise fee when you sign the Franchise Agreement.
  • If you are signing the Franchise Agreement under a Development Agreement, Boston’s will credit a portion of your development fee against the initial franchise fee, as described further below.
  • The entire initial franchise fee is deemed fully earned by Boston’s upon receipt, is non-refundable, and is uniformly imposed.

2.  Development Fee:  $50,000 for the first Restaurant to be developed, plus $25,000 for each additional Restaurant to be developed

  • If you sign a Development Agreement, you must pay a lump sum development fee equal to (a) $50,000 for the first Restaurant to be developed, plus (b) $25,000 for each additional Restaurant to be developed.
  • The amount paid for each Restaurant as a development fee is credited against the initial franchise fee for that Restaurant when you sign the Franchise Agreement. The development fee credit is $50,000 for the first Restaurant and $25,000 for each additional Restaurant.
  • The balance of the initial franchise fee, after applying any development fee credit, is due upon the signing of each Franchise Agreement.
  • The development fee is calculated the same for all franchisees entering into Development Agreements under the 2016 FDD, but the actual dollar amount paid will vary depending on the number of Restaurants you must develop.
  • All amounts collected are fully earned upon receipt and are non-refundable.

3.  Re-scheduling Expenses:  refundable $5,000 opening deposit

  • You must pay a $5,000 opening deposit (“Opening Deposit”) when you sign the Franchise Agreement to cover any re-scheduling expenses that Boston’s incurs as a result of your failure to open the Restaurant on the agreed opening date (“Scheduled Opening Date”).
  • Within 45 days from opening, Boston’s will refund any unused portion of the Opening Deposit to you. If the Restaurant opens on the Scheduled Opening Date, Boston’s will refund the entire Opening Deposit to you.

4.  Pre-Opening Assistance:  $350 per Boston’s employee per day for on-site training, plus travel-related expenses

  • For your first 2 Restaurants, Boston’s will provide you with up to 2 of its employees for at least 3 weeks of on-site training before and during the opening of your Restaurant.
  • Boston’s may charge $350 per employee per day for on-site training, plus travel-related expenses.

5.  Royalty Fee:  5% of Gross Sales

  • Boston’s requires you to pay the royalty fee by electronic funds transfer.
  • “Gross Sales” is defined as all sales generated through the Restaurant, including fees for any products or goods you sell, whether for cash or credit (regardless of collectability, except as provided below), and income of every kind or nature related to the Restaurant, including, without limitation, revenues from the sale of branded merchandise and food products and from the use of jukeboxes, vending machines, video games, pinball machines or similar arcade-like machines, and from video lottery terminals where permitted by law.
  • Gross Sales does not include any sales tax or other taxes you collect from customers and transmit to the appropriate taxing authority.
  • Gross Sales includes the retail value of all products sold in connection with the redemption of coupons, gift certificates, gift cards, or vouchers; however, at the time such coupons, gift certificates, gift cards, or vouchers are purchased, the retail price may be excluded from Gross Sales for the purpose of determining the amount of Gross Sales upon which fees are due.
  • When calculating Gross Sales, you may deduct that portion of the normal full menu price of any item that you do not collect as a result of Boston’s-approved promotions (whether local or system-wide, including coupons) and manager discounts (collectively, “Sales Discounts”), as well as discounted employee meals.
  • Sales Discounts and discounted employee meals must be fully disclosed on all reports you submit to Boston’s, and Boston’s reserves the right, in its sole discretion, to disallow any Sales Discounts not meeting its requirements.
  • Sales Discounts and discounted employee meals each may not exceed 2.5% of Gross Sales (as calculated before the deduction for Sales Discounts and discounted employee meals).

6.  Advertising Assessment:  4% of Gross Sales

  • Due Date:  On or before each Thursday for the preceding week.
  • You must spend at least 4% of the Restaurant’s Gross Sales on advertising. Currently, you must contribute 3% of Gross Sales to the Advertising Fund and spend 1% of Gross Sales on approved local advertising.
  • Boston’s may require you to allocate differing amounts to local advertising (individually or through a cooperative) or to the Advertising Fund, but your total required spend for advertising will not exceed 4% of Gross Sales.
  • Boston’s may require you to pay the Advertising Fund Contribution by electronic funds transfer at the same time as royalty payments.
  • Boston’s reserves the right to charge reasonable administrative fees to the Advertising Fund.
  • Local marketing and promotion will be conducted by you individually or, at Boston’s discretion, with other franchisees in your region.
  • Your local marketing must comply with the policies and procedures established by Boston’s for the prior approval of all proposed marketing and promotion campaigns and materials. You must submit to Boston’s a monthly report demonstrating that you have fulfilled your local marketing requirements.

7.  Late Payment and Interest:  $100 per week, plus interest at 18% per year or the maximum lawful rate (the maximum interest rate in California is 10% annually)

  • Due Date:  On demand.
  • Boston’s may charge interest and late payment fees on all overdue amounts.

8.  Additional and Remedial Training:  at Boston’s option, a reasonable fee based on its costs of providing the training

  • Due Date:  Before additional training.
  • Boston’s has the right to charge for additional and remedial training programs and meetings, and for training replacements and successor personnel.

9.  Transfers by You and Your Principal Owners:  50% of the then-current initial franchise fee

10.  Transfers by Non-Controlling Principals:  Boston’s reasonable costs associated with the transfer, including background checks

11.  Transfers for the Convenience of Ownership:  Boston’s reasonable costs associated with the transfer, including legal and accounting fees

  • Due Date:  30 days before the transfer.
  • For the Franchise Agreement, you must advise Boston’s of any pending transfer, and all transfers must comply with the terms of the Franchise Agreement and be consistent with the transfer guidelines provided to you by Boston’s.
  • The transfer fee must be fully paid before any transfer.
  • Transfers under the Development Agreement are restricted to transfers of non-controlling interests in the developer and assignment of franchise rights to wholly-owned subsidiaries, for which no fee is required.

12.  Audit Fee:  cost of auditing, plus interest

  • Due Date:  When billed.
  • Payable if an audit shows you have understated any amount owed to Boston’s by 3% or more.

13.  Securities Offering Fee:  cost and expense associated with reviewing the proposed offering

  • Due Date:  When billed.
  • Boston’s has the right to review and consent to any public or private offerings of interests in you. Boston’s limits its review to the manner in which the offering materials treat your relationship with it.

14.  Indemnification:  varies according to loss

  • Due Date:  On demand.
  • You must indemnify Boston’s when certain of your actions result in loss to it.

15.  Insurance:  A reasonable amount based on Boston’s expenses.

  • Due Date:  On demand.
  • If you fail to maintain or do not obtain the required insurance, Boston’s may (but need not) obtain it on your behalf and charge you for the cost of the insurance and its reasonable expenses.

16.  Renewal Fee:  $25,000, plus reasonable costs incurred

  • Due Date:  On signing of then-current form of Franchise Agreement.
  • If you elect to renew the Franchise Agreement on the expiration of the initial term, you must pay a renewal fee of $25,000. You must give Boston’s at least 9 months’ and not more than 12 months’ notice to renew and meet other renewal conditions.

17.  Inspection and Testing:  cost of inspection, if applicable, and cost of test

  • Due Date:  When billed.
  • Before approving a supplier, Boston’s may require you to pay the cost of testing the supplier’s products and inspecting its facilities.

18.  Manual Replacement Fee:  $500 per volume

  • Due Date:  Due only if a volume of the set of Manuals is lost, stolen, damaged, etc.
  • If a volume of the set of Manuals is lost, stolen, or destroyed, you must pay Boston’s a non-refundable replacement fee of $500 for each replacement volume.

19.  Enforcement Costs:  will vary

  • Due Date:  As incurred.
  • You must pay Boston’s costs of enforcement (including attorney’s fees and costs) if you do not comply with the Franchise Agreement.

20.  Liquidated Damages:  varies

  • Due Date:  On demand.
  • Liquidated damages are only required if your default results in termination of the Franchise Agreement.
  • Boston’s right to receive liquidated damages does not limit its ability to recover other monies due under the Franchise Agreement and to otherwise seek damages or equitable relief for the harm caused by the conduct which gave rise to the termination, as well as for any other defaults by you under the Franchise Agreement.

21.  POS Support Services Fee:  $1,200 per year or $125 per incident

  • Due Date:  Annually or per incident.
  • If you have entered into a software maintenance agreement, the fee is $1,200 per calendar year, plus all applicable taxes. If not, the fee is $125 per incident, plus all applicable taxes.
  • Boston’s may change these rates upon 60 days’ notice to you.

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