Considering a Brothers Bar & Grill Franchise? Don’t Overlook These 21 Important Franchise Fees

If you are considering a Brothers Bar & Grill 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 Brothers Bar & Grill’s 2016 FDD).

1.  Application Fee:  $3,000

• When Brothers Bar & Grill has made a preliminary determination that you meet its financial qualifications, you pay an Application Fee of $3,000.

• This fee will be used to cover Brothers Bar & Grill’s expenses in processing your application and is not refundable if you are not awarded the franchise.

• If you sign a Franchise Agreement, the Application Fee is credited toward the Initial Franchise Fee.

2.  Initial Franchise Fee:  $30,000 to $50,000

• You pay an Initial Franchise Fee of $50,000 when you sign a Franchise Agreement, provided that (i) if you are currently operating a bar and grill and you are converting it into a Brothers Bar & Grill, the Initial Franchise Fee shall be $30,000; (ii) if you already own a Brothers Bar & Grill, the Initial Franchise Fee shall be $40,000; or (iii) if you are executing the Franchise Agreement pursuant to an Area Development Agreement, your Initial Franchise Fee shall be that as set forth under the Area Development Agreement.

• Brothers Bar & Grill is currently offering a 10% discount off the Initial Franchise Fee to honorably discharged veterans of the U.S. armed forces.

• The Initial Franchise Fee is a lump sum payment, fully earned upon receipt, and is not refundable.

3.  Fees Payable Under Area Development Agreements:  1/2 of the Initial Franchise Fee for each franchised Brothers Bar & Grill to be opened under the Area Development Agreement

• If you sign an Area Development Agreement, you must develop a minimum of three Brothers Bar & Grills and you must pay the following Initial Franchise Fees:  $50,000 for your first Brothers Bar & Grill, $40,000 for your second Brothers Bar & Grill, $35,000 for your third Brothers Bar & Grill, and $30,000 for each subsequent Brothers Bar & Grill.

• Upon signing the Area Development Agreement, you pay a lump sum, nonrefundable Development Fee equal to 1/2 of the Initial Franchise Fee for each franchised Brothers Bar & Grill to be opened under the Area Development Agreement.

• The Development Fee is applied to the Initial Franchise Fee for each Brothers Bar & Grill opened under the Area Development Agreement, so that upon signing the required individual Franchise Agreement for each Brothers Bar & Grill, you must submit the balance of the Initial Franchise Fee for that Brothers Bar & Grill.

• If you fail to comply with the Development Schedule set forth in the Area Development Agreement, you will forfeit your Development Fee and the Development Territory will be re-opened.

4.  Processing Fee to Qualify New Architect or General Contractors:  $2,500

• In addition to the Application Fee, Initial Franchise Fee, and Development Fee (if applicable), you may have to pay Brothers Bar & Grill a nonrefundable $2,500 processing fee to process your request to qualify new architect or general contractors. Under the Franchise Agreement, Brothers Bar & Grill must approve your architect and general contractor.

• Brothers Bar & Grill does not charge any fees for granting its first approval, but if it revokes its prior consent or you fire your architect and/or general contractor, you must retain a new architect and/or general contractor who are subject to Brothers Bar & Grill’s prior approval and you must pay Brothers a nonrefundable $2,500 processing fee to process your request to qualify each new architect or general contractor you desire to retain.

• You will pay Brothers Bar & Grill the processing fee every time you submit such request, regardless of whether it approves or disapproves the new architect or general contractor submitted by you for consideration.

5.  Royalty:  6% of Gross Sales

• Due Date:  Paid weekly by electronic funds transfer every Tuesday for the preceding Reporting Period.

6.  Marketing Fee:  1% of Gross Sales

• Due Date:  Paid weekly by electronic funds transfer every Tuesday for the preceding Reporting Period.

• Once the Marketing Fund is established, Brothers Bar & Grill’s affiliates will contribute the same amount for similarly situated Brothers Bar & Grills the affiliates operate.

7.  Local Marketing:  3% of Gross Sales

• Due Date:  Periodically.

• If Brothers Bar & Grill designates a local advertising market, you must direct your local advertising expenditure to the cooperative programs.

8.  Renewal Fee:  50% of the then-current Initial Franchise Fee charged to other similarly situated franchisees

• Due Date:  30 days prior to the end of the expiring term.

9.  Assignment/Transfer Fee:  50% of the Initial Franchise Fee then being charged to similarly situated franchisees

• Due Date:  At the time the application for transfer is submitted.

• This fee is nonrefundable, even if the proposed transfer does not occur.

• The transfer fee for any failed transfer will not be applied to any future attempted transfer.

10.  Relocation:  Brothers Bar & Grill has the right to charge you for any reasonable costs that it incurs in connection with your relocation

• Due Date:  Immediately upon receipt of bill.

• You may not relocate your Brothers Bar & Grill except as permitted in the Franchise Agreement.

• You must pay the costs of any relocation.

11.  Remodeling:  as may be necessary for your Brothers Bar & Grill to conform to the standards for similarly situated new Brothers Bar & Grill establishments

• Due Date:  As remodeling occurs.

• You pay remodeling costs directly to third party vendors.

12.  Negotiation of Lease Addendum:  reimburse Brothers Bar & Grill’s expenses

• Due Date:  Immediately upon receipt of bill.

• The lease for your Brothers Bar & Grill must include a Lease Addendum in the form attached to the Franchise Agreement. If your landlord asks Brothers Bar & Grill to negotiate the Lease Addendum and Brothers agrees to such negotiations, you must reimburse Brothers the actual costs it incurs in the negotiation, including legal fees.

13.  Audits:  cost of audit

• Due Date:  Immediately upon receipt of bill.

• You will not be charged for audits unless the audit discloses an understatement on data reported to Brothers Bar & Grill.

14.  Mystery Shopper:  reimburse Brothers Bar & Grill’s expenses

• Due Date:  Immediately upon receipt of bill.

• You will not pay for any mystery shoppers unless you fail an evaluation by Brothers Bar & Grill or by a mystery shopper, or if Brothers Bar & Grill receives a customer complaint.

15.  Computer System Expenses:  will vary under circumstances

• Due Date:  At the time the Computer System is bought or updated.

• You must purchase and keep updated the Computer System Brothers Bar & Grill mandates. It may designate a single supplier for the Computer System.

• You may be required to license proprietary software from Brothers Bar & Grill, an affiliate, or a third party and may be required to pay a software licensing or user fee.

16.  Additional Training:  reimburse Brothers Bar & Grill’s expenses

• Due Date:  Immediately upon receipt of bill.

17.  Insurance Premiums and Reimbursement:  will vary under circumstances

• Due Date:  When incurred; when Brothers Bar & Grill requests reimbursement if paid by it.

• Payable to third party providers or to Brothers Bar & Grill if you fail to pay insurance premium and Brothers pays it for you.

18.  Payment of Debts and Reimbursement:  will vary under circumstances

• Due Date:  When incurred; when Brothers Bar & Grill requests reimbursement if paid by it.

• You must pay when due all the obligations you have with third parties. If you fail to make such payments, Brothers Bar & Grill may make such payments on your behalf and you must reimburse Brothers on demand for any such payment along with interest in the amount of 1.5% per month or the maximum rate of interest allowed by law, whichever is lower.

19.  Payment for Violation of Non-Competes:  $5,000 for each violation

• Due Date:  When incurred upon the violation of the non-competes under the Franchise Agreement.

• This payment is for liquidated damages for each violation of the non-competes under the Franchise Agreement.

20.  Payment for Violation of Non-Solicitation:  2 times the annual compensation of each person being hired away

• Due Date:  When incurred upon the violation of the non-solicitation covenants in the Franchise Agreement.

• This payment is for liquidated damages for each violation of the non-solicitation covenants in the Franchise Agreement.

21.  Late Fees:  18% per annum or the maximum rate of interest allowed by law, whichever is lower, of all delinquent amounts owed to Brothers Bar & Grill, plus costs and expenses incurred in collecting the
unpaid amounts

• Due Date:  Immediately as incurred.