Considering a Popeyes Louisiana Kitchen Franchise? Don’t Overlook These 22 Important Franchise Fees

Updated May 23, 2018.

If you are considering a Popeyes Louisiana Kitchen franchise, don’t get blindsided by these 22 important franchise fees (from the initial franchise fee, to the royalty fee, to 20 other fees found in Items 5 and 6 of Popeyes Louisiana Kitchen’s 2018 FDD).

1.  Franchise Fee:  $50,000

• You are required under the Franchise Agreement to pay a franchise fee for each Restaurant in the amount of $50,000 (“Franchise Fee”) prior to opening the Restaurant.

2.  Development Fee:  $50,000 multiplied by the number of net new Restaurants that you are required to develop and have open for business before the last day of that year

• Except as described below, you must sign a Development Agreement regardless of the number of Restaurants you commit to develop.

• When you sign the Development Agreement and on or before January 1 of each year thereafter, you must pay to Popeyes an amount equal to $50,000 multiplied by the number of net new Restaurants that you are required to develop and have open for business before the last day of that year (each such fee is a “Franchise Fee Prepayment”).

• When you sign each Franchise Agreement, Popeyes will apply $50,000 from the previously made Franchise Fee Prepayment towards the Franchise Fee owed by you for the applicable Restaurant until the full amount of the Franchise Fee Prepayment is applied.

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.  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.

9.  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.

10.  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).

11.  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.

12.  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.

13.  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.

14.  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).

15.  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.

16.  Renewal:  50% of Popeyes’ then-current standard initial franchise fee

• Due Date:  Upon signing the Franchise Agreement for the renewal term.

• Renewal is subject to contractual requirements.

17.  Supplemental Term Option:  50% of Popeyes’ then-current standard initial franchise fee

• Due Date:  Upon signing the Franchise Agreement for the supplemental term.

• 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.

18.  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.

19.  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.)

20.  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.

21.  Impact Study:  an amount up to $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.

22.  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.