If you are considering a Freshii 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 Freshii’s 2016 FDD).
1. Letter of Intent Fee: $5,000
- After you submit an application to Freshii for a single unit or multi-unit franchise opportunity, and following the required 14-day waiting period after receipt of the Franchise Disclosure Document, you will be required to sign a letter of intent (the “LOI”).
- You must pay Freshii a non-refundable $5,000 fee when you sign the LOI to cover the costs Freshii incurs in connection with reviewing your application and the due diligence it performs (the “LOI Fee”). This fee is fully earned when paid and is not refundable.
2. Development Fee: 100% of the initial franchise fee for the first Restaurant to be developed ($30,000), plus a deposit of 50% of the initial franchise fee for each additional Restaurant to be developed
- If you sign the Area Development Agreement, you must pay Freshii a “Development Fee” when you sign that Agreement. You must sign the Franchise Agreement for the first Restaurant at the same time you sign the Area Development Agreement.
- The Development Fee is calculated based on the total number of Restaurants you commit to develop under the Area Development Agreement. You must commit to develop a minimum of two restaurants to enter into an Area Development Agreement.
- The Development Fee will be equal to 100% of the initial franchise fee for the first Restaurant to be developed, plus a deposit of 50% of the initial franchise fee for each additional Restaurant to be developed. Freshii will charge an initial franchise fee of $30,000 for each Restaurant.
- Freshii expects Development Fees to range from $60,000 to $250,000. The Development Fee is non-refundable, but Freshii will apply $15,000 of the Development Fee towards the initial franchise fee owed for the second and each additional Franchise Agreement that the Area Development Agreement covers.
3. Initial Franchise Fee: $30,000
- You must pay Freshii a $30,000 initial franchise fee in a lump sum when you sign the Franchise Agreement. If you or your affiliate signed an Area Development Agreement covering this franchise, Freshii will apply $15,000 of the Development Fee towards the initial franchise fee.
- The initial franchise fee is not refundable.
4. Marketing Deposit: $10,000
- When you execute the lease for the Freshii Restaurant, you must pay Freshii a marketing deposit in the amount of $10,000 (the “Marketing Deposit”) and execute its Marketing Deposit Agreement. Freshii will apply the Marketing Deposit to the providers of products and services for the approved grand opening marketing program for your Freshii Restaurant.
- If you pay Freshii’s approved vendors for the grand opening advertising that Freshii requires for your franchise restaurant and provide it with copies of the paid invoices, it will refund to you the amount you paid to those approved vendors, up to $10,000.
- There are no other purchases from or payments to Freshii or any affiliate of Freshii that you must make before your Restaurant opens.
5. Royalty: 6% of Gross Sales
- Due Date: Due weekly on day Freshii specifies (the “Payment Day”).
- Based on Gross Sales during previous week.
- This Royalty applies for all franchises under the Area Development Agreement.
6. Marketing Fund Contributions: amount Freshii specifies, up to 3% of Gross Sales, subject to Marketing Spending Requirement
- Due Date: Due monthly on Payment Day.
- Currently, Freshii has specified 1.5% of Gross Sales as the Marketing Fund contribution.
7. Successor Franchise Fee: Freshii’s then-current standard initial franchise fee
- Due Date: When you acquire successor franchise.
8. Transfer: $10,000
- Due Date: Upon transfer.
- Due only upon transfer of Agreement or controlling ownership interest in you.
9. Ongoing Training and Special Assistance: currently $500 per day, plus out-of-pocket costs and expenses, but could increase if Freshii’s costs increase
- Due Date: As incurred.
- Freshii may charge you for supplemental training courses, programs, and conventions it provides and for additional or special assistance or training you need or request.
10. Replacement Copy of Operations Manual: currently $2,000, but could increase if Freshii’s costs increase
- Due Date: As incurred.
- Due only if you need a replacement copy.
11. New Product/Supplier Testing: Freshii’s good faith estimate of evaluation costs
- Due Date: When billed.
- Covers costs of testing new products or inspecting new suppliers you propose.
12. Music Provider – Playlist Generation: set-up fee of $99 and $42 monthly fee per location
- Due Date: Monthly.
- Payable to approved supplier.
13. Insurance: premiums and Freshii’s costs and expenses
- Due Date: When billed.
- Due only if you fail to maintain insurance and Freshii (at its option) obtains insurance on your behalf.
14. Relocation: reasonable costs Freshii incurs
- Due Date: As incurred.
- Due only if you ask to relocate the Restaurant.
15. Audit: cost of inspection or audit
- Due Date: As incurred.
- Due only if you fail to report or understate by 2% or more.
16. Interest: lesser of 1.5% per month or highest commercial contract interest rate law allows
- Due Date: 15 days after billing.
- Due on all overdue amounts more than 7 days late.
17. Management Fee: 10% of Gross Sales while Freshii manages Restaurant, plus direct out-of-pocket costs and expenses
- Due Date: As incurred.
- Due only if Freshii or its designee manages Restaurant after your (or your managing owner’s) death or disability, after your default or abandonment, or after termination.
18. Costs and Attorneys’ Fees: will vary under circumstances
- Due Date: As incurred.
- Due only if Freshii prevails in legal proceeding.
19. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You must reimburse Freshii if it is held liable for claims from your Restaurant’s operation or your business or breach of agreement.
20. ServSafe / TIPS (or similar) Certification: $150 per person or then-current market rate
- Due Date: As needed.
- Each of your managers and other employees Freshii designates must be ServSafe / TIPS or similarly certified. Payable to an approved supplier.
21. Liquidated Damages: will vary under the circumstances
- Due Date: 15 days after termination.
I would like to open a store whit freshii
in bronx ny
Do not open a freshii. It is not profitable, they have closed many stores, due to aggressive growth and high food cost. You need to pay for fees that are not disussed in the meeting. you will not make money if you invest in freshii franchisee. I have invested in 3 stores, very disappointed.
I agree with Anjali- do not invest in Freshii. The hidden fees that you have to pay for after you start operating your store, is not discussed in the initial meeting. The food cost is very high, and they are not operating the brand in good faith at all. I have invested in 4 stores and very very disappointed.This brand is not profitable, and in fact you will lose money every month.
Will they refund the franchisee fee, if the store never opens?
No, Freshii’s initial franchisee is not refundable. Very few franchisors will refund the initial franchise fee.