Considering an Honest-1 Auto Care Franchise? Don’t Overlook These 23 Important Franchise Fees

Updated March 18, 2019.

If you are considering an Honest-1 Auto Care franchise, don’t get blindsided by these 23 important franchise fees (from the initial franchise fee, to the royalty fee, to 21 other fees found in Items 5 and 6 of Honest-1 Auto Care’s 2018 FDD).

1.  Initial Franchise Fee:  $45,000

• You must pay Honest-1 Auto Care an Initial Franchise Fee depending on the number of franchise Centers you agree to open. The Initial Franchise Fee is non-refundable. If you are eligible for multiple discounts, only one discount will be granted to you.

• Individual Franchisee:  If you are granted the right to open one Honest-1 Auto Care Center, then you will pay an Initial Franchise Fee of $45,000.

• Veteran Franchisee:  If you are a qualified United States Veteran, Honest-1 Auto Care will discount the Initial Franchise Fee by $5,000.

• Existing Franchisee:  If you purchase a second or additional franchises while you are an Honest-1 Auto Care franchisee, the Initial Franchise Fee will be reduced by 15% off the then-current Initial Franchise Fee for an individual Center and the same reduction will apply for each additional franchise purchased by you. At the current Initial Franchise Fee of $45,000, the franchise fee for the second and additional locations would be $38,250.

2.  Coaching Fee:  $15,000

• You must pay a coaching fee for three weeks of onsite initial coaching for your first Center store. Honest-1 Auto Care currently is the only approved vendor for the onsite coaching.

• The fee for the initial coaching program is $15,000 plus related travel expenses and the fee must be paid at the time a location is fully secured, which is typically when the lease is signed or the property is purchased. The coaching will be for up to one week prior to the opening of your Honest-1 Auto Care Center and up to two non-consecutive weeks after opening.

3.  Royalty Fee:  6% of weekly gross sales; 2% of weekly gross sales on tires and batteries only throughout the term of your franchise, however related labor is subject to the standard Royalty Fee

• Due Date:  Payable weekly on Monday.

• Late fee of $10 per day for each day of non-payment of the Royalty Fee and $10 per day for each day a completed Royalty report is not submitted.

• Gross Sales includes the sale of all products and services sold at your Center, less certain taxes and discounts to customers.

• Honest-1 Auto Care will collect your Royalty Fees via electronic funds transfer.

4.  National/Regional Advertising:   1% of weekly gross sales

• Due Date:  Payable weekly on Monday.

• Collected by Honest-1 Auto Care and is non-refundable; Honest-1 Auto Care will collect your advertising fee via electronic funds transfer.

• Honest-1 Auto Care has the ability to increase this fee to a maximum of 2%.

5.  Local Advertising – Franchise Agreement:  $4,000 a month minimum; recommended is $8,000 to $12,000 a month for the first six months and $6,000 to $8,000 a month after the first six months

• Due Date:  To be spent weekly by you.

• You must provide proof of placements to Honest-1 Auto Care. All advertising you propose to use must be pre-approved by Honest-1 Auto Care.

6.  Unauthorized Marketing Fee:  $500 per occurrence; may be continued monthly

• Due Date:  As specified in the notice, typically within two weeks.

• If you fail to obtain Honest-1 Auto Care’s approval before using any advertising or fail to stop using any advertising once Honest-1 Auto Care’s approval is withdrawn, then Honest-1 Auto Care may impose this fee per violation.

• This fee may also be imposed monthly if not corrected upon first notice.

7.  Advertising Cooperative:  at least 3% of gross sales

• Due Date:  As determined by the cooperative.

• Cooperatives may be formed where there are at least two Centers in a specific area. Your payments to a cooperative for advertising will count toward your Local Advertising requirement.

8.  Extension Fee:  $3,000

• Due Date:  Upon request for development extension.

• You may request a one-time extension in your development obligations.

9.  Transfer Fees:  $2,000 application fee; $23,000 transfer fee

• Due Date:  Upon application for transfer (application fee); upon approval of the transfer of the Franchise Agreement, if applicable (transfer fee).

• Collected by Honest-1 Auto Care and is non-refundable; this applies if you are a franchisee transferring your franchise. All transferees must be approved by Honest-1 Auto Care.

10.  Transaction Services Fee:  the greater of 5% of the gross value of the business or $35,000

• Due Date:  Due upon closing of your selling transaction.

• If you authorize Honest-1 Auto Care to find you a buyer or Honest-1 Auto Care provides you a buyer from its interested candidates.

11.  Refresher Training (Franchise Agreement):  no charge

• For refresher training, you pay your own expenses.

12.  Reimbursement of Expenses for Inspection:  actual costs

• Due Date:  15 days after billing.

• If you fail to maintain Honest-1 Auto Care’s standards and it has to inspect your location to verify your compliance, you must pay for its out of pocket costs.

13.  Additional Training:  may range from $250 to $5,000

• Due Date:  15 days after billing.

• If you are opening an additional Center, there may be additional training sessions for which a training fee will apply.

14.  Renewal (Franchise Agreement):  25% of then-current Initial Franchise Fee

• Due Date:  Upon renewal.

15.  Audit:  cost of inspection or audit plus any deficiencies found

• Due Date:  15 days after billing.

• Payable only if you fail to furnish reports, supporting records, or other required information, or if audit finds discrepancy of 2% or more.

16.  Late Fees:  $10 per day for unpaid Royalty Fees or overdue reports

• Due Date:  Upon demand.

• Payable on overdue Royalty Fee amounts and overdue reports.

17.  Interest:  lesser of 18% or highest contract rate of interest allowed by law

• Due Date:  15 days after billing.

• Payable on all overdue Advertising Fees.

18.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  As incurred.

• Payable upon your failure to comply with your Franchise Agreement with Honest-1 Auto Care.

19.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You have to reimburse Honest-1 Auto Care if it is held liable for claims arising from your Center’s operations.

20.  Relocation Expenses:  costs of relocation

• Due Date:  15 days after billing.

• This covers the cost Honest-1 Auto Care incurs if you want to relocate the Center.

21.  Income Taxes:  in addition to monthly Royalty Fees, Honest-1 Auto Care has the right to collect from you the cost of all income taxes, sales taxes, and other taxes arising as a result of Honest-1 Auto Care’s licensing of intellectual property to you in the state where your franchise is located, as well as any assessment on the Royalty Fees, Advertising Fees, and any other income Honest-1 Auto Care receives from you.

• Due Date:  Payable monthly with Royalty Fees.

• Only imposed if state collects these taxes or assessments.

22.  Liquidated Damages:  see formula below

• If Honest-1 Auto Care terminates the Franchise Agreement as a result of your material breach of the Franchise Agreement after your failure to correct any curable defaults, you must pay Honest-1 Auto Care liquidated damages equal to the average monthly Royalties you paid or owed to it during the most recent 12 months of operation before the termination, multiplied by (a) 24 (the number of months in two full years) or (b) the number of months remaining in the Franchise Agreement had Honest-1 Auto Care not terminated it, whichever is less.

23.  Software Maintenance:  $325

• Due Date:  Monthly cost.

• Paid directly to computer vendor (Protractor).