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Considering a HoneyBaked Ham Franchise? Don’t Overlook These 33 Important Franchise Fees

by Franchise Chatter on April 1, 2017

in Franchise Fees, Miscellaneous Food Franchises, Retail Franchise



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

If you are considering a HoneyBaked Ham franchise, don’t get blindsided by these 33 important franchise fees (from the initial franchise fee, to the royalty fee, to 31 other fees found in Items 5 and 6 of HoneyBaked Ham’s 2017 FDD).

1.  Franchise Fee:  $20,000 to $30,000

  • The initial franchise fee (“Franchise Fee”) for a franchise is $30,000 and is payable when you sign the Franchise Agreement. If you are an existing franchisee and you operate at least one HoneyBaked Ham Store, HoneyBaked Ham will reduce your Franchise Fee to $20,000.
  • The Franchise Fee is fully earned when paid, is not refundable under any circumstances, and is not credited against any other fees paid to HoneyBaked Ham.
  • If you paid a Development Fee for a Store under an Area Development Agreement, HoneyBaked Ham will credit the Development Fee that you paid for that Store against the Franchise Fee for that Store.
  • HoneyBaked Ham is a member of the International Franchise Association’s VetFran Program. Under HoneyBaked Ham’s VetFran Program, if you (or a holder of at least a 51% ownership interest in your franchisee entity) provide HoneyBaked Ham with a DD Form 214 or other adequate documentation as determined by HoneyBaked Ham, demonstrating honorable discharge from the United States military, and you sign a Franchise Agreement to develop and operate a new Store, then HoneyBaked Ham will reduce your Franchise Fee by $10,000.

2.  Area Development Fee:  $10,000 for each Store that you agree to develop at the time you sign the Agreement

  • If you sign the Area Development Agreement, you must pay a fee in the amount of $10,000 for each Store that you agree to develop at the time you sign the Agreement (“Development Fee”).
  • The Development Fee is uniform for all franchisees, except for certain situations when HoneyBaked Ham waives the Development Fee for franchisees who purchase Stores from it or its affiliates.
  • HoneyBaked Ham will credit the $10,000 Development Fee that you paid for that Store against the Franchise Fee for that Store. The Development Fee is not refundable under any circumstances.

3.  Payments for Products, Equipment, and Services:  $10,000 to $12,000

  • Before you open your Store, you must purchase an initial inventory of turkey; other protein products such as pot roast, BBQ roast, and ribs; side dishes; desserts; condiments; bags, boxes, and other paper and plastic supplies; lunch products including drinks; bread; and produce with an estimated cost of $10,000 to $12,000 payable to suppliers, vendors, and HoneyBaked Ham.
  • The typical costs for the initial supply of specialty hams, equipment, supplies, and training and marketing materials payable to HoneyBaked Ham will range from $4,000 to $5,500, depending upon your projected needs.

4.  Computer Hardware and Software:  $9,200 to $13,100

  • Before you open your Store, you must purchase the hardware and software described in Item 11 from HoneyBaked Ham, a designated affiliate of HoneyBaked Ham, or other manufacturers and suppliers.
  • The cost of this hardware and software (excluding costs and expenses of installation by HoneyBaked Ham or others, if required) is currently $9,200 to $13,100.

5.  Royalty:  5% of net sales for first 12 months; 5 1/2% of net sales for second 12 months; 6% of net sales in all subsequent months

  • Due Date:  On or before the 20th day of each calendar month based on the net sales during the preceding calendar month.

6.  Advertising Fund Contribution:  2% of net sales

  • Due Date:  Same as royalty.
  • You must contribute to any national, regional, or local advertising fund or cooperative established for the area in which your Store is located. This amount is in addition to the amount you are required to spend on local advertising.

7.  Local Advertising:  2 1/4% of net sales

  • Due Date:  Not paid to HoneyBaked Ham.
  • You may determine the content, form, and media for your advertising, subject to HoneyBaked Ham’s approval.

8.  Advertising Deficiencies:  amount of local advertising deficiency

  • Due Date:  14 days after date of invoice.
  • HoneyBaked Ham may require you to provide, at least quarterly, copies of invoices documenting expenditures for local advertising. If you fail to make required advertising expenditures, HoneyBaked Ham has the right to do so on your behalf and you must reimburse it.

9.  Additional Training:  HoneyBaked Ham’s reasonable costs of training program

  • Due Date:  Upon demand.

10.  Advertising Materials:  HoneyBaked Ham’s costs and expenses

  • Due Date:  Upon demand.
  • HoneyBaked Ham may develop or procure advertising and marketing plans and materials. If HoneyBaked Ham elects to offer you advertising materials, it reserves the right to charge you an amount sufficient to cover its costs and expenses.

11.  Annual Convention:  up to $500

  • Due Date:  Upon demand.
  • All franchisees must pay an annual convention fee by January 31st of each year.

12.  Appraisal Fee:  $2,500 to $7,500

  • Due Date:  Upon demand.
  • If upon expiration or termination, HoneyBaked Ham exercises its right to purchase and an appraisal is required, then you are responsible for the cost of appraisal.
  • HoneyBaked Ham may offset the cost of this appraisal from the purchase price for your Store.

13.  Audit Expenses:  reasonable costs

  • Due Date:  Upon demand.
  • If an audit discloses an understatement of 2% or more of the net sales of your Store for any period or periods, then you must pay HoneyBaked Ham the reasonable cost of audit.
  • Such costs may include attorneys’ and accountants’ fees, travel expenses, room, board, and actual compensation of HoneyBaked Ham’s employees. You also must pay for two subsequent audits over the next 24-month period to verify that the accounting regularities have been corrected.

14.  CMS/Point-of-Sale Support Fee:  $1,200 per year for basic support and upgrades for up to 4 registers

  • Due Date:  On or before January 31st of each year.

15.  Conferences:  HoneyBaked Ham’s reasonable costs and expenses of the conferences

  • Due Date:  Upon demand.

16.  Costs to Cure Defaults:  reasonable costs

  • Due Date:  Upon demand.
  • You must reimburse HoneyBaked Ham for its reasonable costs to cure any of your defaults that are curable, if you have failed to cure the defaults within 15 days after notice of default, and HoneyBaked Ham chooses to do so.

17.  Customer Satisfaction Programs:  up to $100 per incident

  • Due Date:  Upon demand.
  • You must participate in HoneyBaked Ham’s current customer satisfaction program as described in Item 8. If you fail to resolve a customer complaint to HoneyBaked Ham’s satisfaction and it resolves the complaint on your behalf, you will be required to reimburse HoneyBaked Ham for its expenses.

18.  Damages for Enforcing Option to Purchase Store:  $5,000 to $20,000

  • Due Date:  Upon demand.
  • You must reimburse HoneyBaked Ham for any damages, costs, and expenses (such as attorneys’ fees) incurred by HoneyBaked Ham in attempting to enforce its option to purchase.

19.  Employee Training:  2 times daily salary of trainer, plus HoneyBaked Ham’s expenses and costs. Estimated per diem is $250 daily.

  • Due Date:  Upon demand.
  • If you request and HoneyBaked Ham’s personnel are available, HoneyBaked Ham may provide on-the-job training to your employees at your Store.

20.  Ham Override:  currently $0.20/pound

  • Due Date:  Upon demand.
  • HoneyBaked Ham invoices franchisees for all ham purchases from its suppliers and has the right to charge an override charge for each pound of ham purchased.

21.  Indemnification:  any losses

  • Due Date:  Upon demand.
  • You must pay for losses to HoneyBaked Ham or its affiliates, or any of their officers, directors, managers, agents, or employees resulting from the operation of your business or from any other acts or omissions.

22.  Inspection and Testing Fee:  costs of inspecting the supplier’s facilities or testing samples

  • Due Date:  Upon demand.
  • If you propose to purchase any items (other than specialty hams) from suppliers not designated or approved by HoneyBaked Ham, you submit a request to HoneyBaked Ham.

23.  Insurance Reimbursement:  any cost and premiums incurred

  • Due Date:  Upon demand.
  • If you fail to obtain the insurance as required by the Franchise Agreement, HoneyBaked Ham may obtain the required insurance on your behalf.

24.  Interest and Late Fees:  if any payment is more than 30 days late, then it will bear interest at the rate of 1 1/2% per month or the maximum rate permitted by law, whichever is less, plus a $100 late fee

  • Due Date:  Upon demand.
  • HoneyBaked Ham will not extend any further credit to you if your payments are more than 30 days past due, and all of your purchases after that must be paid in advance in cash or by certified or cashier’s check.

25.  Online Catering Program:  currently $0

  • Due Date:  Upon demand.
  • HoneyBaked Ham does not currently charge a fee for you to participate in its online catering program, although it reserves the right to charge a fee in the future.

26.  Management Fee:  5% of sales

  • Due Date:  Upon demand.
  • If, after your death or permanent disability, HoneyBaked Ham determines that your Store is not being managed properly, it has the right to appoint a manager for the Store. It may also appoint a manager during any period following its exercise of an option to purchase the franchise, until closing.

27.  QA Audit:  $325 to $375

  • Due Date:  Upon demand.
  • If you receive a failing score on a Quality Assurance (“Q&A”) audit, you must reimburse HoneyBaked Ham for the costs of having it or its designee conduct a follow-up inspection to assess whether you have corrected the deficiencies noted in the Q&A audit.

28.  Reimbursement of Costs and Expenses:  HoneyBaked Ham’s costs and expenses, including attorneys’ fees

  • Due Date:  Upon determination of prevailing party.
  • If there is a lawsuit, arbitration, or other proceeding between you and HoneyBaked Ham, and it prevails, then you must reimburse it for its costs and expenses, including attorneys’ fees.

29.  Reimbursement of Costs and Expenses Regarding Modifications or Supplementations to Franchise Agreement:  HoneyBaked Ham’s costs and expenses (including attorneys’ fees)

  • Due Date:  Upon demand.
  • You must reimburse HoneyBaked Ham for all costs and expenses incurred in connection with any modification or supplementation of the Franchise Agreement or any waiver or consent granted by HoneyBaked Ham, except where a modification or supplement results from an initiative by it.

30.  Relocation Fee:  $2,500

  • Due Date:  Upon demand.
  • Any relocation of the Store must be approved in advance by HoneyBaked Ham.

31.  Renewal Fee:  $7,500

  • Due Date:  At least 30 days before effective date of renewal.

32.  Technology Fee:  currently $0

  • Due Date:  Upon demand.
  • Although it does not currently do so, in the future HoneyBaked Ham may implement a Technology Fee to cover the costs of developing, launching, updating, and maintaining your Store website which can be accessed through the MyHoneyBakedStore.com website.

33.  Transfer Fee:  $7,500

  • Due Date:  Before transfer.
  • If you are an individual and transfer your Store to a corporation, partnership, or limited liability company, HoneyBaked Ham may charge a reasonable fee sufficient to cover its costs.



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