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Considering a Kilwins Chocolates Franchise? Don’t Overlook These 23 Important Franchise Fees

by Franchise Chatter on June 1, 2017

in Chocolate Franchise, Franchise Fees, Retail Franchise



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Don't Invest in a Franchise Until You Check Out This List

If you are considering a Kilwins Chocolates franchise, don’t get blindsided by these 23 important franchise fees (from the initial franchise fee, to the royalty fee, to 21 other fees found in Items 5 and 6 of Kilwins Chocolates’ 2017 FDD).

1.  Franchise Fee:  $40,000



  • When you sign the Franchise Agreement, you must pay Kilwins Chocolates an initial franchise fee of $40,000.
  • For franchisees entering into a Franchise Agreement for their second Store, Kilwins Chocolates has reduced the initial franchise fee to 50% of the initial franchise fee payable for the first Store ($20,000).

2.  Deposit:  $7,500

  • Before Kilwins Chocolates enters into a Franchise Agreement with you, you may sign a Deposit Agreement. Under the Deposit Agreement, you will provide Kilwins Chocolates with a $7,500 deposit, which it will credit against your initial franchise fee when you sign the Franchise Agreement.
  • Under the Deposit Agreement, you will have 90 days within which to locate a site. If you are unable to locate a site that is acceptable to Kilwins Chocolates within that 90-day time period, if you or Kilwins Chocolates terminates the Deposit Agreement (which you or Kilwins Chocolates has the right to do at any time), or if you reject a site Kilwins Chocolates has located for you, the deposit will be refunded to you, less Kilwins Chocolates’ actual out-of-pocket expenses incurred in performing its obligations under the Deposit Agreement, plus a reasonable per diem expense (currently $500) for its personnel who worked in connection with the site evaluation process.
  • The Deposit Agreement does not confer upon you any franchise or territorial rights.

3.  Inventory:  $22,203 to $24,273

  • Before opening your Store, you will need to buy an opening inventory. Kilwins Chocolates estimates that the inventory needed for a typical first Store in the preferred range of 1,200 to 1,500 square feet will range from $22,203 to $24,273, assuming all available discounts are taken.
  • You must purchase this inventory from Kilwins Chocolates’ affiliate, Quality Confections.

4.  Software Development Fee:  $1,000

  • The Kilwins Point of Sale (POS) system requires, among other things, the development and installation of the Kilwins POS software on that system. In connection with that development and installation, you are required to pay Kilwins Chocolates a POS system software development fee (the “Software Development Fee”) in the amount of $1,000 at the time you sign the Franchise Agreement.

5.  Kilwins-Build Stores – Architectural and Engineering Agreement, Store Construction Agreement, and Equipment Management Agreement:  will vary under the circumstances

  • You will have the choice of whether to engage Kilwins Chocolates to construct a Kilwins-Build Store, or whether you wish to hire contractors, purchase and install equipment, and do these and other things on your own (“Franchisee-Build Store”).
  • If you choose to engage Kilwins Chocolates to construct a Kilwins-Build Store, then you will sign an Architectural and Engineering Agreement and a Store Construction Agreement.
  • If you choose to build a Franchisee-Build Store, you may still enter into an Architectural and Engineering Agreement so that Kilwins Chocolates can hire and manage an architectural and engineering firm for your Franchisee-Build Store.

6.  Royalty:  5% of Gross Sales

  • Due Date:  On or before the tenth calendar day of each month; calculated on the Gross Sales for the prior month.
  • Gross Sales means all revenue related to the Store (excluding sales taxes collected and remitted to the proper authorities). Payments must be made by electronic funds transfer using the Automated Clearing House (ACH) Network.

7.  National Marketing Fund:  1% of Gross Sales



  • Due Date:  Same as Royalty.
  • You must contribute these amounts to the National Marketing Fund, which Kilwins Chocolates has established.
  • Payments must be made by electronic funds transfer (using the ACH network).

8.  Regional Fund:  1% of Gross Sales

  • Due Date:  Same as Royalty.
  • If Kilwins Chocolates forms a “Regional Fund” for your area, you must join that Regional Fund, and a majority of the Store owners in that Regional Fund may vote to increase your contribution to that Regional Fund (but only up to an extra 2% of Gross Sales).
  • Payments must be made by electronic funds transfer (using the ACH network).

9.  Local Marketing:  2% of Gross Sales

  • Due Date:  Upon demand.
  • Kilwins Chocolates may require that you deposit your local marketing funds into a special bank account that Kilwins Chocolates will establish and administer, from which you may apply to withdraw those funds for purposes of conducting local marketing efforts.

10.  Transfer Fee:  $23,500 or 58% of Kilwins Chocolates’ then-current initial franchise fee, whichever is
more

  • Due Date:  At time of transfer.
  • Payable if you sell your franchise or your company.

11.  Interest on Overdue Payments:  18% per year on the underpayment

  • Due Date:  Upon demand.
  • Payable only on overdue amounts, from the date when originally due.

12.  Costs and Attorneys’ Fees:  will vary under circumstances

  • Due Date:  Upon demand.
  • If you default under the Franchise Agreement, you must reimburse Kilwins Chocolates for its expenses (including reasonable attorneys’ fees) in enforcing or terminating the Franchise Agreement.

13.  Audit Costs:  all costs and expenses associated with the audit, reasonable accounting and legal costs, and interest on the underpayment



  • Due Date:  Upon demand.
  • Payable only if Kilwins Chocolates audits because you did not submit sales statements or keep books and records, or if sales are underreported by 2% or more.

14.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.

15.  Securities Offering Fee:  $5,000 or Kilwins Chocolates’ actual expenses, whichever is greater

  • Due Date:  Upon demand.
  • If you engage in a securities offering, you must reimburse Kilwins Chocolates for its reasonable costs and expenses (including legal and accounting fees) to evaluate your proposed offering and you also must indemnify Kilwins Chocolates (see above).

16.  Replacement Training:  $3,000 for each replacement training session, plus travel expenses

  • Due Date:  Before training begins.

17.  Additional Individuals for Initial Training:  $3,000 for each individual over the first four individuals

  • Due Date:  Before training begins.

18.  Web-Based Employee Training:  up to $50 per employee per year

  • Due Date:  As incurred.
  • You may be required to enroll each of your employees in Kilwins Chocolates’ web-based training program, and it may charge you up to $50 per employee per year for this training.

19.  Recurrent Inspection:  time plus expenses

  • Due Date:  Upon demand.
  • Charged only when Kilwins Chocolates has to make additional trips to your Store to correct a violation which was not corrected upon returning for the second inspection, or where additional training is required.

20.  Sale of Store Sales Fee:  up to 7% of the sales price of the Store

  • Due Date:  Upon sale of Store.
  • Charged only if you request Kilwins Chocolates’ assistance in finding a buyer for your Store and facilitating the sale of the Store. It is your option to ask Kilwins Chocolates to provide this service.

21.  Technology Development Fee:  $75 per month per Store

  • Due Date:  On or before the 5th day of each month.
  • Kilwins Chocolates currently requires you to install and use a Point of Sale computer system. This is a proprietary Point of Sale cash register and sales management system that Kilwins Chocolates has developed.
  • Payments must be made by electronic funds transfer using the Automated Clearing House (ACH) Network.

22.  POS Support Fee:  currently, $72.50 per month per Store

  • Due Date:  On or before the 5th day of each month.
  • This is a monthly fee payable to Kilwins Chocolates’ POS supplier and it is subject to change.

23.  E-mail Account:  $120 per year per e-mail account

  • Due Date:  As incurred.
  • This is an annual fee payable to Kilwins Chocolates for its costs in maintaining an e-mail account. Additional e-mail addresses are optional at a cost of $120 per year.

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