If you are considering a Popeyes Louisiana Kitchen 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 Popeyes Louisiana Kitchen’s 2017 FDD).
1. Development Fee: $22,500 for each Restaurant to be developed
- Except as described below, you must sign a Development Agreement regardless of the number of Restaurants you commit to develop and pay a development fee (“Development Fee”) for each Restaurant to be developed at the time you sign the Development Agreement.
- The Development Fee for each Restaurant is $22,500 and is not credited against any other fee.
- In certain transactions involving a single Restaurant, Popeyes may waive the requirement that you sign a Development Agreement but not the Development Fee. If Popeyes waives the Development Agreement in connection with a single Restaurant, you will sign an Amendment to Franchise Agreement (Single Unit) and pay the Development Fee.
2. Franchise Fee: $22,500
- The Franchise Fee is $22,500 for each Restaurant. You must pay the Franchise Fee, which is in addition to the Development Fee, prior to the commencement of construction of each Restaurant.
- In certain Alternative Venues, Popeyes may waive or reduce the Franchise Fee.
3. Royalty: 5% of Gross Sales
- Due Date: Weekly on Gross Sales for the prior week.
- “Gross Sales” means all revenue related to the Restaurant, less sales taxes.
4. Advertising Fund Contribution: 4% of Gross Sales
- Due Date: Same as royalty.
- Popeyes may reduce or waive the Advertising Fund Contribution for restaurants located in Alternative Venues.
5. Advertising Co-op: currently 0.25% to 2% of Gross Sales as established by Local Advertising Co-op (in addition to Advertising Fund Contribution)
- Due Date: Same as royalty.
- The exact amount of the contribution to the Co-op will be determined by a vote of its members; when added to the Advertising Fund Contribution, the total will not be less than 4% of Gross Sales.
6. Audit: cost of audit
- Due Date: If incurred, on demand.
- If Popeyes audits you and finds that you understated Gross Sales by 2% or more, you must reimburse it for the cost of the audit.
7. Costs and Attorneys’ Fees: Popeyes’ costs and expenses
- Due Date: Immediately, if incurred.
- Costs and attorneys’ fees are payable if Popeyes terminates the Franchise Agreement because of your default.
8. Development Schedule Extension Fee: up to $5,000 for each Development Schedule Extension
- Due Date: Upon approval of any Development Schedule Extension.
- Popeyes may, in its sole discretion, grant one or more Development Schedule Extensions of 12 months duration or less.
- Popeyes may waive the Development Schedule Extension Fee in certain circumstances.
9. Employee Engagement Surveys: up to $200 per Restaurant per year
- Due Date: As arranged.
- You must reimburse Popeyes for the cost of having a supplier conduct up to two employment engagement surveys every year.
10. Guest Recovery Fee: $200 to $300 per year; based on the number and type of guest complaints received by the guest relations hotline with respect to your Restaurant
- Due Date: If incurred, on demand.
- You must reimburse Popeyes for the cost of gift checks provided to your guests in response to guest complaints and also the fulfillment costs with respect to such gift checks.
11. Indemnity: the losses and expenses Popeyes incurs
- Due Date: If incurred, on demand.
- You must indemnify and reimburse Popeyes for its costs and any judgment if it is sued for claims relating to the operation of your Restaurant.
- You must also reimburse Popeyes for costs it incurs in enforcing the agreements if you default or if you sue it (unless you are found to be in compliance with the agreements).
12. Insurance: cost of obtaining coverage, plus interest and a reasonable administrative fee that Popeyes will set
- Due Date: If incurred, on demand.
- If you do not obtain or maintain insurance coverage and Popeyes purchases coverage on your behalf, you must reimburse it.
13. Interest on Overdue Payments: 1.5% per month or the maximum rate permitted by law, whichever is less
- Due Date: If payments are more than 7 days overdue, on demand.
- Interest on late payments runs from the date you should have made your payment until the date it is received by Popeyes.
14. Interest on Understated Sales: 1.5% per month or the maximum rate permitted by law, whichever is less
- Due Date: If incurred, on demand.
- Interest on underreported sales runs from the date you should have made your payment until the date you pay Popeyes.
15. Returned Payment Fee: $35 per returned payment
- Due Date: If incurred, on demand.
- Any payment you make or that Popeyes drafts in accordance with its policies and/or your agreements that is returned for insufficient funds or otherwise not honored by your bank will be assessed a fee (or the maximum fee allowable by law).
16. Product Testing, Inspections, and Approval: costs for testing new products and inspecting new suppliers
- Due Date: If incurred, on demand.
- If you request approval to purchase ingredients, supplies, and goods from suppliers that Popeyes has not approved, you must pay the actual cost and expenses it incurs for inspecting the supplier’s facility and testing such ingredients, supplies, and goods.
17. Renewal: 50% of Popeyes’ then-current standard initial franchise fee or $15,000, whichever is greater
- Due Date: Upon signing the Franchise Agreement for the renewal term.
- Renewal is subject to contractual requirements.
18. Supplemental Term Option: 50% of Popeyes’ then-current standard initial franchise fee or $15,000, whichever is greater
- Due Date: Upon acquisition of Supplemental Term Option.
- This fee covers both (i) the purchase of the supplemental option and (ii) the exercise of the supplemental 10-year renewal term. Renewal is subject to contractual requirements.
19. Securities Offering Review Fee: $5,000 or a greater amount, if necessary, to reimburse Popeyes for its out-of-pocket costs and expenses in connection with reviewing your proposed securities offering
- Due Date: Upon request for review.
20. Site Visit Fee: $1,500 per site visit
- Due Date: If incurred, on demand.
- Popeyes will conduct site visits for up to 2 proposed sites at no cost to you. Thereafter, it will charge you $1,500 per site visit until a site is accepted.
21. Construction Site Visit Fee: $1,500 per construction site visit request
- Due Date: Upon your request for construction site visit.
- Popeyes will conduct construction site visits at Restaurants under construction for 100 days or less at no cost to you. Thereafter, it will charge you $1,500 per construction site visit requested by you.
22. Trade Secret Products: approximately $3,000 initially; approximately $3,000 per month when in operation
- Due Date: As arranged.
- You may buy certain Trade Secret Products only from a vendor that Popeyes designates (the vendor is currently Diversified Foods and Seasonings, Inc.)
23. Training – Lead From The Heart: $350 per attendee
- Due Date: If incurred, on demand.
- Attendees of the Popeyes Training Program may elect to attend Lead From the Heart Training.
24. Transfer: $7,500
- Due Date: Before transfer.
- No transfer fee is required if the transfer is to a corporation or other business entity of which you own 100% and such entity was formed for convenience of ownership.
25. Impact Study: $6,000 per study
- Due Date: If incurred, on demand.
- In connection with reviewing a proposed site, which could have impact on other franchised locations in close proximity to the proposed site, an impact study may be requested to further consider approval of the site.
26. Non-Solicitation of Employees: $5,000 per occurrence
- Due Date: If incurred, on demand.
- If you hire a manager/assistant manager-level employee of Popeyes or another Popeyes franchisee in the same or contiguous DMA, you will be required to pay Popeyes or that franchisee $5,000.
27. EcoSure Audit: $225 per out-of-cycle audit
- Due Date: If incurred, on demand.
- If your Restaurant fails a Food Excellence Audit, you will be responsible for paying EcoSure to perform the follow-up out-of-cycle audit.
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