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Considering a Panera Bread Franchise? Don’t Overlook These 27 Important Franchise Fees

by Franchise Chatter on May 1, 2017

in Bakery Franchise, Bakery-Cafe Franchise, Franchise Fees



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If you are considering a Panera Bread franchise, don’t get blindsided by these 27 important franchise fees (from the initial franchise fee, to the royalty fee, to 25 other fees found in Items 5 and 6 of Panera Bread’s 2017 FDD).

1.  Development Fee:  $5,000 for each Panera Bread Bakery-Cafe that may be opened under the Area Development Agreement

  • Under the Area Development Agreement, you must pay a development fee of $5,000 (the “Development Fee”) for each Panera Bread Bakery-Cafe that may be opened under the Area Development Agreement.
  • The number of Panera Bread Bakery-Cafes that you may develop under a particular Area Development Agreement is determined by mutual agreement. The number of Panera Bread Bakery-Cafes will vary depending upon a variety of factors, including:  (1) existing population and anticipated population growth within the Development Area; (2) competition within the Development Area; (3) the availability of acceptable locations; and (4) the number of Panera Bread Bakery-Cafes the franchisor estimates can be developed within the Development Area.
  • The initial franchise fee payable for each Panera Bread Bakery-Cafe you are required to develop under an Area Development Agreement is $35,000.
  • Panera Bread will apply $5,000 of the Development Fee paid under the Area Development Agreement against the initial franchise fee payable under each Franchise Agreement entered into under the terms of the Area Development Agreement.
  • No portion of the Development Fee is refundable if you fail to develop the cumulative number of Panera Bread Bakery-Cafes that may be developed in accordance with the terms of the Area Development Agreement.

2.  Initial Franchise Fee:  $35,000

  • The initial franchise fee is $35,000, which is due and payable, less $5,000 of the Development Fee paid pursuant to the Area Development Agreement as described above, at least 30 days prior to the scheduled opening of a Panera Bread Bakery-Cafe.
  • After a Franchise Agreement has been signed, the initial franchise fee is not refundable in whole or in part.
  • Except as noted above with respect to the application of a portion of the Development Fee due and payable under an Area Development Agreement, and possibly in connection with the conversion of a Paradise Bakery & Cafe to a Panera Bread Bakery-Cafe and with the sale of company-owned Panera Bread Bakery-Cafes and/or non-traditional locations, the $35,000 franchise fee is uniform to all franchisees currently purchasing a franchise.

3.  Renewal Fee:  50% of Panera Bread’s then-current franchise fee



  • A franchise fee equal to 50% of Panera Bread’s then-current franchise fee is payable in connection with the renewal of a Franchise Agreement.
  • Due upon signing successor Franchise Agreement.

4.  Transfer Fee:  $7,500, plus costs

  • A transfer fee of $7,500, plus costs, is payable in connection with the transfer of a Franchise Agreement.
  • Except in the case of a transfer to a legal entity formed solely for the convenience of ownership, you must pay Panera Bread a transfer fee.
  • Due upon sale or transfer.

5.  Initial Inventory:  $300 to $500

  • Before opening a Panera Bread Bakery-Cafe, you must purchase your initial inventory of certain frozen dough and fresh dough products from Panera Bread, which you will purchase on a daily basis, at a cost of approximately $300 to $500, which amount is non-refundable.

6.  Development Services Fee:  currently $110,000

  • Panera Bread may enter into Development Services Agreements with franchisees, which provide that Panera Bread may from time to time, at its discretion and on a nonexclusive basis, offer to sell to existing franchisees Panera Bread Bakery-Cafe locations to be developed by Panera Bread.
  • The purchase price for such proposed locations are the total development costs incurred by Panera Bread, plus an additional Development Fee (currently $110,000 under existing contracts, however this fee may be modified based on location, services rendered, changes in actual costs, and other factors determined from time to time by Panera Bread).
  • These costs are in addition to any franchise fees payable in connection with franchisee’s acquisition of the location.
  • Panera Bread will issue a Bill of Sale in connection with any items transferred to franchisees in connection with the Development Services Agreement, which will provide the extent to which such items shall be covered by any warranties. In most instances, Panera Bread would expect that such items will remain subject to any applicable manufacturer’s warranties but shall otherwise be transferred by Panera Bread without any additional express or implied warranties.

7.  Real Estate Selection and Construction Management Services Fee:  currently $110,000

  • Panera Bread may enter into Real Estate Selection and Construction Management Services Agreements with franchisees, which provide that Panera Bread may from time to time, at its discretion and on a nonexclusive basis, offer to provide real estate assistance services to franchisees (such as real estate selection and construction management services).
  • The fees for these services are currently $110,000, however this fee may be modified based on location, services rendered, changes in actual costs, and other factors determined from time to time by Panera Bread.
  • These costs are in addition to any franchise fees payable in connection with the franchisee’s acquisition of the location.
  • Unlike the Development Services Agreement described above, Panera Bread will provide consulting or advisory services only, rather than developing the Bakery-Cafe and transferring possession of the Bakery-Cafe assets to the franchisee.

8.  Franchisee Software and Services Master Supply Fee:  will vary under circumstances

  • Franchisees may enter into a Software and Services Agreement for certain Panera owned or licensed software and other technologies to support the operation of Panera Bread Bakery-Cafes. The specific software or services to be supplied and the fees payable will be set forth in an applicable State of Work on a project by project basis.
  • Fees for Panera 2.0 are generally structured as initial start-up fees, periodic subscription fees, percentage of sales fees, or a combination of each depending upon the nature of the services or materials provided.
  • Currently, you may purchase from Panera Bread optional technology products and services at a cost of approximately $47,000.

9.  Royalty:  5% of Net Sales

  • Due Date:  Payable on 1st business day immediately following each “Reporting Period.”
  • Payment made by automatic electronic withdrawal.
  • “Reporting Period” is the period from Wednesday to Tuesday (or as determined by Panera Bread).

10.  Advertising

National Advertising Fund (“NAF”):  2.6% of Net Sales

Local Advertising Funds (“LAF”):  2.0% of Net Sales

Marketing Administration Fee (“MAF”):  0.4% of Net Sales



Advertising Association: determined by Advertising Association

  • Due Date:  NAF, MAF and LAF (to the extent collected by Panera Bread) are payable on the 1st business day immediately following each “Reporting Period.”
  • To the extent collected by Panera Bread, payment is made by automatic electronic withdrawal.
  • “Reporting Period” is the period from Wednesday to Tuesday (or as determined by Panera Bread).

11.  Miscellaneous Administrative Fees:  to be reasonably determined by Panera Bread from time to time

  • Due Date:  Upon demand.
  • Currently, miscellaneous fees include a special $50 handling charge for each incomplete or non-electronically received order from your Bakery-Cafe for Panera Bread’s bakery products, and a $30 fee if you do not submit Periodic Reports timely.

12.  Proprietary Ingredients:  for dough, the price is not to exceed 27% of “Retail;” for other Proprietary Ingredients, the price is established by the supplier thereof from time to time

  • Due Date:  For dough sales, 21 days following the end of the sales week for franchisees not in default; otherwise as ordered.

13.  Licensed Ingredients:  prices are established by approved suppliers from time to time

  • Due Date:  As ordered.

14.  Other Food Products and Supplies and Distribution Fees:  will vary under circumstances

  • Due Date:  As ordered.
  • You may purchase other food products, paper supplies, uniforms, and promotional material from approved suppliers (including Panera Bread) and/or in accordance with Panera Bread’s standards and specifications.

15.  Quality Control Program:  will vary under circumstances

  • Due Date:  Ongoing.
  • Must contribute pro-rata share of costs of any program implemented, such as Interactive Voice Response (“IVR”) Customer Satisfaction Measurement, “customer intercept,” or other programs Panera Bread may implement.

16.  Re-Inspection Fee:  $3,500

  • Due Date:  Upon demand.
  • If the inspection conducted by Panera Bread or its designated agents reveals that your Bakery-Cafe fails to meet Panera Bread’s minimum standards (as it determines from time to time), Panera Bread may charge its then-current standard re-inspection fee for any follow-up inspection relating to such failure.

17.  Interest on Late Payments:  2% over prime rate

  • Due Date:  Immediately.
  • The interest rate applies to any money you owe Panera Bread, or any of its Affiliates (as defined in the Franchise Agreement), after the due date.

18.  Fee for Insufficient Funds in Bank Account:  currently $30 (bank fee, plus administrative fee)

  • Due Date:  Within 14 days of notice from Panera Bread of the insufficient funds.
  • Applies to any insufficient fund payment made by electronic transfers or checks to Panera Bread or its Affiliates.

19.  Fees to Evaluate and Approve Alternative Suppliers:  Panera Bread’s reasonable costs and expenses, which currently are expected to range between $2,500 and $7,500, although costs could greatly exceed those amounts depending on the product and the proposed alternative supplier

  • Due Date:  Upon receipt of Panera Bread’s bill.
  • Panera Bread may impose reasonable inspections and supervision fees to cover its costs in evaluating and maintaining alternative brands or suppliers you propose in accordance with the Franchise Agreement.

20.  Audit:  cost of audit, which is expected to range between $30,000 and $70,000 assuming you have maintained adequate books and records

  • Due Date:  Completion of audit.
  • Payable if you fail to furnish required information or if Panera Bread finds an understatement of Net Sales greater than 2%. The estimated range is for an audit of a multi-unit franchisee, not for a single Panera Bread Bakery-Cafe.

21.  Site Selection Costs:  Panera Bread’s reasonable expenses, which are expected to range between $1,500 and $4,000

  • Due Date:  As incurred.
  • Must reimburse Panera Bread for its reasonable expenses, including the costs of travel, meals, and lodging incurred in site evaluation for each visit after the initial visit.
  • The expenses associated with site evaluation will not be refundable and will vary depending on various factors.

22.  Insurance:  will vary under circumstances

  • Due Date:  As incurred.
  • If you fail or refuse to obtain the required insurance coverage for the Panera Bread Bakery-Cafe, Panera Bread may obtain coverage at your expense.

23.  Maintenance Costs:  will vary under circumstances

  • Due Date:  As incurred.
  • If you fail or refuse to maintain the Panera Bread Bakery-Cafe as required, Panera Bread has the right to do so on your behalf and at your expense.

24.  Attorneys’ Fees and Other Costs:  will vary under circumstances

  • Due Date:  As incurred.
  • Payable if Panera Bread prevails in any legal dispute with you or in connection with an indemnification.

25.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.
  • You must reimburse Panera Bread if it incurs any expense, including attorneys’ fees and other costs, or are held liable for claims arising out of your breach of the Franchise Agreement or the development and operation of your Bakery-Cafe.

26.  All Optional Panera IS Services:  will vary under circumstances

  • Due Date:  Payable on the 1st business day of each calendar month, billed one month in advance.
  • All payments to be made by automatic electronic withdrawal.

27.  Panera IS Proprietary Enterprise Software, eLearningBaguette University (“BU”), and Back of the House (“BOH”) PC Hardware and System Support Fees:  will vary under circumstances

  • Due Date:  As incurred.


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