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.
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