If you are considering a Papa Murphy’s franchise, don’t get blindsided by these 33 important franchise fees (from the initial franchise fee, to the royalty fee, to 31 other fees found in Items 5 and 6 of Papa Murphy’s 2017 FDD).
1. Franchise Fee: $0 to $25,000
- You must pay Papa Murphy’s a Franchise Fee of $25,000 when you sign the Franchise Agreement for the purchase of your Franchised Store unless you have signed an Area Development Agreement and paid an Area Development Fee.
- If you have signed an Area Development Agreement and paid an Area Development Fee, there will be no Franchise Fee for your first store. You will pay Papa Murphy’s a nonrefundable Franchise Fee of $10,000, as a non-recurring franchise fee, at the time(s) set forth in the Area Development Agreement for each additional Franchised Store built pursuant to the Area Development Agreement.
2. Area Development Fee: $25,000 for the first Franchised Store, and $15,000 multiplied by the remaining number of Franchised Stores to be opened under the Area Development Agreement
- For qualified candidates, Papa Murphy’s may grant development rights allowing a franchisee to open more than one Franchised Store under an Area Development Agreement.
- The nonrefundable area development fee (“Area Development Fee”) for an Area Development Agreement that is not part of an incentive program is $25,000 for the first Franchised Store, and $15,000 multiplied by the remaining number of Franchised Stores to be opened under the Area Development Agreement.
- If you sign an Area Development Agreement that is not part of an incentive program and pay the Area Development Fee, there will be no Franchise Fee for your first Franchised Store and, as described above, your Franchise Fee will be $10,000 for each subsequent Franchised Store you develop under the Area Development Agreement.
3. Multiple Store Fee: $25,000 for each store
- For qualified candidates, Papa Murphy’s may grant a franchisee the right to develop multiple stores pursuant to a Multiple Store Commitment Letter and Amendment to Franchise Agreements. The nonrefundable multiple store fee (“Multiple Store Fee”) for a Multiple Store Commitment is $25,000 for each store and is due upon signing.
- If you sign a Multiple Store Commitment Letter and Amendment to Franchise Agreement, you will sign a Franchise Agreement for each Franchised Store under the Multiple Store Commitment.
- The Multiple Store Fee is deemed fully earned upon receipt and not refundable in whole or in part under any circumstances, even if you fail or are unable to open any of the Franchised Stores provided for under the Multiple Store Commitment Letter and Amendment to Franchise Agreements.
4. Royalty Fee: 5% of your weekly Net Sales
- Due Date: Each week for the prior week.
- Papa Murphy’s requires an Automated Clearinghouse (“ACH”) authorization that allows it to automatically deduct the fee from your Franchised Store bank account each week based upon your reports of Net Sales.
5. Brand Marketing Fee: 2% of your weekly Net Sales
- Due Date: Each week for the prior week.
- Papa Murphy’s requires an ACH authorization that allows it to automatically deduct the fee from your Franchised Store bank account each week based upon your reports of Net Sales.
6. Local Marketing and Promotion, and Regional Cooperative Advertising: minimum of the greater of 5% of your Net Sales or $2,000 during each month
- Due Date: You must spend this amount each month.
- Company-owned stores have the same voting rights as Franchised Stores in these cooperatives.
7. Online Ordering Fee: $0.35 per online transaction
- Due Date: Each week for the prior week.
- Papa Murphy’s requires an ACH authorization that allows it to automatically deduct the Online Ordering Fee from your Franchised Store bank account each week based upon the number of online ordering transactions completed.
8. Marketing Kits: $45 to $500
- Due Date: As incurred.
- Papa Murphy’s requires an ACH authorization that allows it to automatically deduct the fee from your Franchised Store bank account.
9. Studio Art Request Rush Fee and Custom Commercial Work: $50
- Due Date: As incurred.
- Papa Murphy’s currently charges a $50 rush fee for art requests that are submitted without the minimum time required by the PMI Studio.
10. Customer Relations Management: $35 per month for up to 50 telephone surveys; $.49 per survey overage fee
- Due Date: Monthly.
- Papa Murphy’s requires an ACH authorization that allows it to automatically deduct the fee from your Franchised Store bank account.
11. Audit: the costs of conducting an audit, plus related expenses
- Due Date: As incurred.
- Payable only if audit shows an understatement of at least 2% of Net Sales reported. You must bear the cost of providing copies of books, records, and documents to Papa Murphy’s or its representatives.
12. Insurance: your insurance must include at a minimum comprehensive general liability coverage, including products liability coverage, in an amount of at least $2,000,000 per occurrence and business automobile liability insurance in an amount of at least $1,000,000 per occurrence. You must name Papa Murphy’s as an additional insured.
- Due Date: As incurred.
- Payable to Papa Murphy’s only if you fail to purchase the required insurance and Papa Murphy’s purchases it for you.
13. Transfer Fee: $25,000 less $2,500 times the number of full years remaining on the initial term of the Franchise Agreement; or, if the transfer occurs during a successive term, $25,000 less $2,500 times the number of full years remaining on the Successive Franchise Agreement, but in no event less than $12,500
- Due Date: Upon execution of the Franchise Agreement.
- Transfer is contingent upon satisfaction of other requirements.
14. Indemnification: varies
- Due Date: Within a reasonable time after request.
- You must reimburse Papa Murphy’s for all of its costs and expenses if it is held liable for claims arising from your acts or omissions to act.
15. Additional Assistance or Training: $100 to $300 per day
- Due Date: As incurred.
- Except for Operations Training, Foundations Class, and Enterprise Solution Training, there is no fee to attend a training class.
- You must pay all of your travel, accommodations, meals, and other expenses.
16. Franchise Conventions: $1,000 to $3,500
- Due Date: As scheduled.
- You must pay all of your travel, accommodations, meals, and other expenses.
- Papa Murphy’s may charge you a fee to attend.
17. Convention Materials: up to $500
- Due Date: As required.
- Payable only if you fail to attend a Franchise Convention.
18. Successive Franchise Fee: one-half of the then-current Franchise Fee
- Due Date: 60 days prior to expiration of Franchise Agreement.
- A condition of continued operations.
19. Relocation Fee: $5,000
- Due Date: Prior to relocation.
- Payable if you relocate your Franchised Store.
20: Interest: interest of 1.5% per month unless otherwise limited by law (18% per annum)
- Due Date: Due while amounts owed remain unpaid.
- You will not be compelled to pay interest at a rate greater than the maximum allowed by applicable law.
21. Bookkeeping/Payroll Service: $0 to $500
- Due Date: Monthly.
- Payable directly to third party vendor.
22. Non-sufficient Funds Fees: $35, plus reimbursement of fees Papa Murphy’s incurs
- Due Date: As incurred.
- Payable to Papa Murphy’s only if you have insufficient funds available in your bank account from which it automatically deducts fees.
23. Store Solutions Team Support: $542 per year
- Due Date: Quarterly.
- Payable directly to Papa Murphy’s.
- Subject to an annual increase.
24. Software Maintenance: $393 per year
- Due Date: Quarterly.
- Payable either directly to third party vendor or to Papa Murphy’s.
- Subject to an annual increase.
25. Hosting Fees, Anti-Virus Service, Online Ordering, and Additional Services: $575 per year
- Due Date: Quarterly.
- Payable either directly to third party vendor or to Papa Murphy’s.
- Subject to an annual increase.
26. Late Payment Fee: $75
- Due Date: As incurred.
- Payable to Papa Murphy’s only if you fail to pay any obligation under the NCR Financial Responsibility Agreement within 15 days after an invoice is sent; or if you close your bank account or cause a stop payment on your bank account.
27. Payment Card Industry Data Security Standards Compliance (PCI-DSS) and Managed Firewall Service: $35 to $55 per month
- Due Date: Monthly.
- Payable directly to third party vendor.
28. Business Class High Speed Internet Access: $50 to $125 per month
- Due Date: Monthly.
- Payable directly to third party vendor.
29. Upgrade, Refurbish, and Replace: $4,000 to $50,000
- Due Date: Within a reasonable time after request.
- If Papa Murphy’s requires any changes in or additions to premises, fixtures, furnishings, or equipment, you must do so at your sole expense, within the time that Papa Murphy’s reasonably requires.
30. Expenses in Evaluating a Supplier Proposed by You: Papa Murphy’s reasonable expenses
- Due Date: Within a reasonable time after request.
- If you ask Papa Murphy’s to approve a supplier, you must pay Papa Murphy’s its reasonable expenses incurred in evaluating your proposed supplier.
31. Step-In Costs: personnel and administrative costs, plus 15%
- Due Date: Within a reasonable time after request.
- If Papa Murphy’s steps-in to operate your Franchised Store, you must pay Papa Murphy’s personnel and administrative costs, plus 15%, to cover its direct and indirect expenses.
32. Assignment Fees: up to $500
- Due Date: As incurred.
- Payable to Papa Murphy’s for any necessary documentation resulting from an approved change in ownership of your Franchised Store.
33. Sublease Reimbursement Costs: reimbursement of any fees Papa Murphy’s incurs
- Due Date: Upon request.
- In limited situations, Papa Murphy’s may enter into a sublease with you under the Pre-Sale Development Program. In those situations, if Papa Murphy’s incurs any expenses under the Prime Lease for the Franchise Premises, you must reimburse Papa Murphy’s for such expenses upon request.
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