Considering a Teriyaki Madness Franchise? Don’t Overlook These 28 Important Franchise Fees

If you are considering a Teriyaki Madness franchise, don’t get blindsided by these 28 important franchise fees (from the initial franchise fee, to the royalty fee, to 26 other fees found in Items 5 and 6 of Teriyaki Madness’s 2017 FDD).

1.  Initial Franchise Fee:  $45,000 to $99,000

• Teriyaki Madness offers 2 different Franchise packages depending on the number of Teriyaki Madness Businesses you wish to purchase:

• Single Franchise (1 Teriyaki Madness Business):  $45,000 initial franchise fee
• Standard Franchise (up to 3 Teriyaki Madness Businesses):  $99,000 initial franchise fee

• If you purchase a Standard Franchise package, you will sign the “Multi-Teriyaki Shop Addendum,” the form of which is attached to the 2017 Franchise Disclosure Document in Exhibit H. There is no development territory or development schedule to open additional Teriyaki Madness Businesses.

• You will sign a Franchise Agreement for your first Teriyaki Madness Business and you will be required to sign a “Teriyaki Shop Rider” for each additional Teriyaki Madness Business that you open under a Standard Franchise.

• The Initial Franchise Fee is uniform, payable when you sign your Franchise Agreement, and is non-refundable under any circumstances, even if you fail to open any Teriyaki Madness Businesses.

• The Initial Franchise Fee is payment for all of Teriyaki Madness’s pre-opening assistance that it provides to allow you to open your Teriyaki Madness Business and also offsets some of its franchisee recruitment expenses.

2.  Store Opening Assistance Fee:  $7,500 to $14,500

• In addition to the Initial Franchise Fee, you must pay Teriyaki Madness’s affiliate, MH International, a “Store Opening Assistance Fee” of $14,500 for the first Teriyaki Shop that you purchase, which offsets Teriyaki Madness’s costs in supporting your efforts to find, develop, and open the Teriyaki Shop (“Store Opening Assistance”).

• You will pay the Store Opening Assistance Fee when you sign the Franchise Agreement.

• If you purchase a Standard Franchise, the Store Opening Assistance Fee is $7,500 for each additional Teriyaki Shop. You will pay the Store Opening Assistance Fee for the additional Teriyaki Shops when you sign the Teriyaki Shop Rider.

• Initial Franchise Fees and Store Opening Assistance Fees are fully earned by Teriyaki Madness when paid and are not refundable under any circumstances.

• Unless otherwise agreed to, by way of example, through a franchise sales promotion, or otherwise, all Initial Franchise Fees and Store Opening Assistance Fees are uniform.

3.  Opening Extension Fee:  $250 per week

• If you fail to open the Teriyaki Madness Business within 12 months of signing the Franchise Agreement or the applicable Teriyaki Shop Rider, you will be required to pay Teriyaki Madness an “Opening Extension Fee” of $250 per week until the Teriyaki Madness Business is open or Teriyaki Madness will terminate the Franchise Agreement.

4.  Royalty Fee:  6% of Gross Revenues

• Due Date:  Tuesday of each week.

• The “Royalty Fee” is based on Gross Revenues during the previous week.

• Payments are made via an electronic funds transfer (“EFT”).

• Your Royalty Fee is an ongoing payment that allows you to use the marks and the intellectual property of the System and pays for Teriyaki Madness’s ongoing support and assistance.

5.  Marketing Fund Contribution:  2% of Gross Revenues

• Due Date:  Same as Royalty Fee.

• Teriyaki Madness has established a marketing fund (“Marketing Fund”) which is discussed in more detail in Item 11.

6.  Local Advertising Requirement:  $15,000 per year per Teriyaki Shop

• Due Date:  As incurred.

• This requirement is discussed in more detail in Item 11.

• If you fail to provide required documentation for the local advertising requirement in any given period, you will be required to pay the difference to the Marketing Fund.

• This requirement is in addition to your grand opening requirement.

7.  Technology Fee:  currently $400 per month for the first Teriyaki Shop and the discounted rate for each additional Teriyaki Shop (currently $300 per month per Teriyaki Shop)

• Due Date:  Monthly.

• For use of Teriyaki Madness’s online systems, email, data sharing, enterprise reporting, loyalty program, and other Internet related functions.

• Teriyaki Madness collects this fee on the first Tuesday of each month.

• Teriyaki Madness reserves the right to increase this fee in the event it offers updated or additional software or technology for use in the Teriyaki Madness franchise.

8.  Payment Service Fees:  3% of total charge

• Due Date:  As incurred.

• If payment is made to Teriyaki Madness by credit card for any fee required, it may charge a service charge of 3% of the total charge.

9.  Additional Training or Assistance Fees:  an amount set by Teriyaki Madness (currently $500 per additional person per day for initial training and $500 per person per day for additional training, plus all travel expenses)

• Due Date:  As incurred.

• Teriyaki Madness provides initial training at no cost for up to 2 people for your first Teriyaki Madness Business; it may charge you for training newly-hired personnel, refresher training courses, and additional or special assistance or training you need or request. The fee amount will depend on the training required.

• If Teriyaki Madness provides additional training at your Teriyaki Shop, you may be required to pay for its instructors’ travel expenses as well.

10.  Conference Fee:  currently $2,000 for up to 2 attendees, plus expenses; and $1,000 for each additional attendee, plus expenses. You will receive a $500 credit if at least 1 of your required participants attends the convention.

• Due Date:  As incurred.

• The “Conference Fee” is payable to Teriyaki Madness to help defray the cost of your attendance at the convention(s) including the cost of the hotel (based on double occupancy).

• Teriyaki Madness reserves the right to charge this fee whether or not you attend the convention.

• Teriyaki Madness did not hold an annual convention in 2016.

11.  Transfer Fee:  50% of Teriyaki Madness’s then-current Initial Franchise Fee per Teriyaki Shop

• Due Date:  $1,000 deposit at time of transfer application submittal and the remaining balance of the Transfer Fee at time of approved transfer.

• Payable or waivable at Teriyaki Madness’s sole discretion only in connection with the transfer of your Teriyaki Shop, a transfer of ownership of your legal entity or the Franchise Agreement.

12.  Successor Franchise Fees:  10% of Teriyaki Madness’s then-current Initial Franchise Fee per Teriyaki Shop

• Due Date:  At the time you sign the successor Franchise Agreement.

• This fee is commonly referred to as a “renewal fee.” Payable if you qualify for a successor Franchise and choose to enter into a successor Franchise Agreement.

13.  Relocation Fee:  currently $5,000

• Due Date:  Upon submission of request to relocate.

• Payable if you relocate your Teriyaki Madness Business.

14.  Operations Manual Replacement Fee:  $1,500

• Due Date:  As incurred.

• Payable if the Manual Teriyaki Madness loans to you is lost, stolen, or destroyed.

15.  Late Payment:  $100 per occurrence, plus lesser of the daily equivalent of 15% per year simple interest or the highest rate allowed by law

• Due Date:  As incurred.

• Payable if any payment due to Teriyaki Madness is not made by the due date.

• Interest accrues from the original due date until payment is received in full.

16.  Returned Check or Insufficient Funds Fee:  $100 per occurrence

• Due Date:  As incurred.

• Due each time a check you write to Teriyaki Madness is dishonored or you have insufficient funds for an EFT payment.

17.  Audit:  cost of audit, plus late fee of 1.5% interest per month on understatement (Teriyaki Madness  estimates this cost to be between $1,000 and $15,000)

• Due Date:  Upon demand.

• Payable only if audit shows an understatement of at least 2% of Gross Revenues for any month or if you fail to fully cooperate with Teriyaki Madness’s third party auditors or inspectors, as determined by the third party auditors or inspectors.

18.  Taxes:  amount assessed by federal, state, and local tax authorities on any payments you make to Teriyaki Madness

• Due Date:  Upon demand.

• Payable if Teriyaki Madness is assessed any taxes on any payments you make to it (including sales, gross receipt, excise, use, or similar taxes, but not income taxes).

19.  Indemnification:  varies under circumstances

• Due Date:  As incurred.

• You must indemnify and reimburse Teriyaki Madness for any expenses or losses that it or its representatives incur related in any way to your Teriyaki Madness Business, Franchise, or the operation of your Teriyaki Madness Business.

20.  Legal Costs and Professional Fees:  will vary under circumstances

• Due Date:  As incurred.

• You will be required to pay any costs that Teriyaki Madness incurs as a result of any breach or termination of your Franchise Agreement.

• This fee will include a minimum administrative cost of $250 to cover Teriyaki Madness’s expenses.

21.  Insurance:  reimbursement of Teriyaki Madness’s costs, plus a 20% administration charge

• Due Date:  On demand.

• If you fail to obtain insurance, Teriyaki Madness may obtain insurance for you and you must reimburse it for the cost of insurance obtained, plus 20% of the premium for an administrative cost of obtaining the insurance.

22.  Management Fee:  $500 per day per representative, plus expenses

• Due Date:  As incurred.

• Payable if Teriyaki Madness manages the Franchise after you materially breach the Franchise Agreement, or upon your death, disability, or prolonged absence.

23.  Liquidated Damages:  will vary under the circumstances

• Due Date:  15 days after termination of the Franchise Agreement.

24.  Unauthorized Advertising Fee:  $250 per occurrence

• Due Date:  Upon demand.

• This fee is payable to the Marketing Fund if you use unauthorized advertising in violation of the terms of the Franchise Agreement.

25.  Failure to Submit Required Financial Report Fine:  $100 per occurrence and $100 per week

• Due Date:  Your bank account will be debited for failure to submit any requested report within 5 days of request.

• Fines collected are paid to the Marketing Fund.

26.  Maintenance and Refurbishment:  varies under the circumstances

• Due Date:  As incurred.

• You must perform regular maintenance for your Teriyaki Madness Business.

• You must refurbish your Teriyaki Madness Business within 6 months after Teriyaki Madness’s request.

• You will not be required to refurbish your Teriyaki Madness Business within your first 3 years of operation.

27.  Supplier and Product Evaluation Fee:  cost of inspection (estimated to be approximately $100 to $500)

• Due Date:  As incurred.

• Payable if Teriyaki Madness inspects or tests product samples from proposed suppliers nominated by you.

28.  Customer Satisfaction Reimbursement:  varies under circumstances

• Due Date:  As incurred.

• Teriyaki Madness may, in its sole discretion, remedy any issues with customers of your Teriyaki Madness Business, including full reimbursement of any fees paid to you. You are required to reimburse Teriyaki Madness for any such remedy.

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