Considering a TCBY Franchise? Don’t Overlook These 18 Important Franchise Fees

Updated October 14, 2018.

If you are considering a TCBY franchise, don’t get blindsided by these 18 important franchise fees (from the initial franchise fee, to the royalty fee, to 16 other fees found in Items 5 and 6 of TCBY’s 2018 FDD).

1.  Initial Franchise Fee:  $35,000

• You must pay TCBY, on your execution of the Franchise Agreement, a nonrecurring, nonrefundable initial franchise fee in the amount of $35,000.

• However, if when you and TCBY sign the Franchise Agreement, TCBY has not accepted your proposed premises for your Store, you will instead pay TCBY a nonrefundable deposit of $5,000 (the “Deposit”) when you sign the Franchise Agreement, and the remaining balance of the initial franchise fee will be due and payable on the earlier of (a) when TCBY accepts the proposed premises for your Store, or (b) six months from signing the Franchise Agreement, unless TCBY exercises its right at that time to terminate the Franchise Agreement, in which case, it will not refund the Deposit, but you will not be obligated to pay the remaining balance of the initial franchise fee.

• The initial franchise fee or, as applicable, the Deposit is uniform, is deemed fully earned by TCBY when it signs the Franchise Agreement, and is not refundable.

2.  Initial Fee for Vending Agreement:  $3,000

• When you sign the Vending Agreement, you will pay TCBY an “Initial Fee” of $3,000 for each Machine covered by the Vending Agreement. This fee is uniform for franchisees entering into Vending Agreements, TCBY fully earns it when the Vending Agreement is signed, and it is not refundable under any circumstances.

3.  Vending Machine:  $30,500, plus applicable sales or use tax

• You will purchase the Machine from TCBY’s affiliate at a price of $30,500 plus applicable sales or use tax. The purchase price is uniform for franchisees buying a Machine, it is fully earned when TCBY’s affiliate transfers title to the Machine, and it is not refundable under any circumstances.

4.  Annual Fee for Vending Machines:  $6,500

• For each Machine covered by the Vending Agreement, you will pay TCBY an annual fee of $6,500 (the “Annual Fee”). The Annual Fee is paid in quarterly installments of $1,675 each.

• The 1st installment will be due when you sign the Vending Agreement or, if you subsequently purchase additional Machines, as each Machine is added to the Vending Agreement. Each subsequent installment is due in 90-day increments thereafter.

• The Annual Fee is uniform for franchisees entering into Vending Agreements, TCBY fully earns it when the Vending Agreement is signed, and it is not refundable under any circumstances.

5.  Royalty:  6% of Gross Revenues

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

6.  Marketing Fee:  3% of Gross Revenues

• Due Date:  Same as Royalty fee.

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

• Due Date:  When incurred.

• TCBY may charge a fee for certain training programs.

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

• Due Date:  When incurred.

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

9.  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 has the right to make special assistance programs available to you for which you must pay fees and charges that TCBY establishes.

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

• Due Date:  When the delinquent payment is due.

11.  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.

12.  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.

13.  Audit:  cost of financial audit, plus interest at a rate equal to the lesser of the highest rate allowed under applicable law or 1.5% per month

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

• You must pay the costs of the audit or inspection only if you fail to furnish TCBY with reports, financial statements, tax returns or schedules, or if the audit results show an understatement of Gross Revenues 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.

14.  Transfer Fee:  $5,000

• 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.

15.  Renewal Fee:  $2,000 under Franchise Agreement

• Due Date:  Payable upon renewal.

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

16.  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.

17.  Costs and Attorneys’ Fees; Indemnification:  will vary under the 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.

• Depending on the circumstances, you may pay these costs and fees to attorneys and other third parties, or reimburse TCBY or its affiliates.

18.  Lost Revenue Damages:  will vary under the circumstances

• Due Date:  When incurred.

• If TCBY terminates the Franchise Agreement as a result of your breach, you must pay TCBY 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 expires or is terminated, or on any later date that TCBY determines.