Considering a TCBY Franchise? Don’t Overlook These 16 Important Franchise Fees

Updated December 15, 2020.

If you are considering a TCBY franchise, don’t get blindsided by these 16 important franchise fees (from the initial franchise fee, to the royalty fee, to 14 other fees found in Items 5 and 6 of TCBY’s 2020 FDD).

1.  Initial Franchise Fee:  $35,000

• You must pay TCBY, on your execution of the Franchise Agreement, a non-recurring, non-refundable initial franchise fee in the amount of $35,000.

• TCBY may reduce the initial franchise fee to $25,000 if you are an honorably discharged veteran of the United States military or if you are an existing franchisee. TCBY may modify or eliminate these discounted initial franchise fee programs at any time.

• Except as described above, the initial franchise fee is uniform and deemed fully earned by TCBY when it signs the Franchise Agreement.

2.  Royalty:  6% of Gross Revenue

• Due Date:  Weekly on or before the close of business on Wednesday of each week, based on your Store’s Gross Revenue for the immediately preceding week.

3.  Marketing Fee:  3% of Gross Revenue

• Due Date:  Same as Royalty fee.

4.  Training Fee:  none currently, but may be charged in the future

• Due Date:  When incurred.

• TCBY may charge a fee for certain training programs.

5.  Refresher/Additional Training:  then-current fees; currently estimated at $500 per day per person, plus travel expenses

• Due Date:  When incurred.

• TCBY may require you and/or previously trained and experienced managers and employees to attend periodic refresher or additional courses at the times and locations it designates.

6.  Special Assistance:  daily fees and charges TCBY establishes; currently estimated at $500 per day per person, plus travel expenses

• Due Date:  When incurred.

• TCBY does not charge for the operating assistance and guidance it provides to all of its franchisees. However, TCBY may make special assistance programs available to you for which you must pay fees and charges that TCBY establishes.

7.  Late Payment Fee:  $100 for each delinquent payment

• Due Date:  When the delinquent payment is due.

8.  Late Reporting Fee:  $100 for each delinquent report

• Due Date:  When the delinquent report is due and continuing to be due for each period that the report remains delinquent.

9.  Interest Expenses:  a rate equal to the lesser of the highest rate allowed under applicable law or 1.5% per month

• Due Date:  Payable at the same time you make a delinquent payment.

• Payable on any amount overdue to TCBY.

10.  New Supplier Testing:  the costs TCBY incurs in evaluating a proposed supplier

• Due Date:  When incurred.

• Due if you request TCBY’s approval of a new proposed supplier.

11.  Audit:  cost of financial audit

• Due Date:  15 days after receipt of audit or inspection report.

• You must pay the costs of the audit or inspection only if the audit results show an understatement of Gross Revenue of more than 2% or if the need for an audit was a result of your default under the Franchise Agreement in failing to provide records and reports in a timely manner.

12.  Transfer Fee:  $12,500

• Due Date:  Payable before or upon final closing of transfer.

• TCBY will not charge a transfer fee if the transfer is of ownership interests among your existing Entity Owners and the names and identity of all Entity Owners remain the same following the transfer.

13.  Renewal Fee:  $2,500

• Due Date:  Payable upon renewal.

• You must meet other conditions in order to renew the Franchise Agreement.

14.  Interim Management Fees:  10% of Gross Revenues during the period of management

• Due Date:  As incurred.

• Incurred if TCBY elects to manage your Store pending its purchase of that Store, or it assumes management of your Store in the case of your voluntary abandonment.

15.  Costs and Attorneys’ Fees; Indemnification:  will vary under circumstances

• Due Date:  Upon occurrence.

• If TCBY or an affiliate prevails in any proceeding or litigation against you, you must pay the costs and attorneys’ fees incurred. You and each of your Entity Owners also have indemnification obligations to TCBY and its affiliates.

16.  Lost Revenue Damages:  will vary under circumstances

• Due Date:  Within 15 days of TCBY’s termination of your Franchise Agreement based on your default.

• You will be charged lost revenue damages if TCBY terminates the Franchise Agreement as a result of your breach, at an amount equal to the net present value of the Royalty and marketing fees that would have become due had the Franchise Agreement not been terminated, from the date of termination to the earlier of: (a) 5 years following the date of termination, or (b) the scheduled expiration of the term of the Franchise Agreement (the “Measurement Period”).

• Lost Revenue Damages will be calculated as follows: (1) the number of calendar months in the Measurement Period, multiplied by (2) the aggregate of the Royalty and marketing fee percentages, multiplied by (3) the average monthly Gross Revenue of your Store during the 12 full calendar months immediately preceding the termination date; provided, that if as of the termination date, your Store has not been operating for at least 12 months, you shall use the average monthly Gross Revenue of all Stores operating under the same Marks during the entirety of TCBY’s fiscal year immediately preceding the termination date.

• You will pay TCBY Lost Revenue Damages within 15 days after the Franchise Agreement is terminated, or on any later date that TCBY determines.