Considering a Huntington Learning Center Franchise? Don’t Overlook These 25 Important Franchise Fees

If you are considering a Huntington Learning Center franchise, don’t get blindsided by these 25 important franchise fees (from the initial franchise fee, to the royalty fee, to 23 other fees found in Items 5 and 6 of Huntington Learning Center’s 2017 FDD).

1.  Initial Franchise Fee:  $0 to $25,000

• The initial franchise fee is $25,000, which you pay to Huntington when you sign the Franchise Agreement.

• Huntington participates in the International Franchise Association’s VetFran Program. If you are a veteran honorably discharged from the U.S. Armed Forces or on active duty in the U.S. Armed Forces on the Agreement Date, Huntington will reduce or eliminate the initial franchise fee for your first new or transfer franchise.

2.  Development Agreement:  $5,000 multiplied by the number of franchised Huntington Learning Centers you agree to develop

• If you sign a Development Agreement, then, when you sign it, you pay Huntington a nonrefundable development fee in the amount of $5,000 multiplied by the number of franchised Huntington Learning Centers you agree to develop.

• If you are in compliance with the Development Agreement and have not received three or more default notices under the Franchise Agreement, Huntington will credit $5,000 towards the initial franchise fee payable under each Franchise Agreement that you sign under the Development Agreement.

3.  Borrowed Funds:  non-refundable loan facility fee of $3,800

• New franchisees can borrow up to $100,000 from Huntington or its affiliate in opening their first Franchised Business.

• A non-refundable loan facility fee of $3,800 will be assessed for this service.

4.  Required Purchases:  $10,799

• You are required to purchase certain computer hardware and software from Huntington, identified in the IT Startup Package Purchase Order in Exhibit P.

• This hardware and software includes computer and network equipment, Microsoft Office Professional, anti-virus software, bookkeeping software, and other software.

• Currently, these items cost about $10,799, including shipping and New Jersey tax.

5.  Royalty:  9.5% of Gross Revenue; $2,000 per month minimum

• Due Date:  10th of each month for preceding month.

• Minimum begins the earlier of the 9th full calendar month after opening or the 15th full calendar month after the Agreement Date. The Royalty charged upon transfer or signing a subsequent Franchise Agreement may be different.

6.  Ad Fund Contribution:  2% of Gross Revenue; $500 per month minimum

• Due Date:  10th of each month for preceding month.

• Payable to the Ad Fund.

• Minimum begins on the same start date as Royalty.

7.  Cooperative Advertising:  determined by CoOp members, except as provided by the CoOp’s by-laws. Some CoOps impose no fee. Those that do impose a fee average about $2,000 per month.

• Due Date:  10th of month for preceding month, or CoOp decides.

• Payable to your Advertising CoOp.

• Huntington credits any Cooperative Advertising Fees to your minimum local advertising requirement, to the extent they do not exceed it.

• Some CoOps may require you to spend more than the required minimums.

• You should speak with your CoOp’s members to determine their contributions.

8.  Local Advertising:  spend at least $36,000 per year during opening year and 1st full year; $46,000 during 2nd year; $57,000 during 3rd year and each subsequent year. Prorated during opening and last years.

• Due Date:  As required by vendors.

• Payable to vendors for your local advertising.

• The local advertising amount upon signing a Transfer Franchise Agreement or Subsequent Franchise Agreement may be greater.  The local advertising amount is greater when you offer Test Prep.

• Many franchisees spend more than the minimum and Huntington encourages you to do so.

• Typically nonrefundable.

9.  Training and Technology Services:  $380 per month in opening year and 1st full year; $450 per month in 2nd year; $550 per month in 3rd year; $565 per month in 4th year. Thereafter subject to change.

• Due Date:  10th of each month for preceding month.

• Begin paying as of 3rd full month after the Agreement Date.

• Upon signing a Transfer Franchise Agreement or Subsequent Franchise Agreement, pay maximum beginning as of 1st full month after you sign it.

• If you purchase additional seat licenses for Huntington’s Online Training Facility, Huntington will charge you an additional $15 per month per additional seat license.

10.  Internet Service Provider (ISP):  $45-$130 per month

• Due Date:  As vendor requires.

• These costs vary widely based on the ISP and speed you select.

11.  Convention:  $495 for first attendee; $325 per subsequent attendee

• Due Date:  Before convention.

• Huntington waives the first attendee’s convention fee for franchisees who participate on councils and the Ad Fund’s Board of Directors.

• Fee is subject to change.

12.  Call Center:  $335 per month, plus variable Academic Evaluation fee

• Due Date:  10th of each month for preceding month.

• Waived through 2nd full month of operation. Fee is subject to change.

13.  Conference Services:  $87.50 per hour; minimum of 3 hours per month

• Due Date:  10th of each month for preceding month.

• Waived from the date you sign your lease through 2nd full month of operation.

• Fee is subject to change.

14.  Huntington Online Prep:  $72.50 for the four-test option and $51.75 for the two-test option

• Due Date:  Upon billing.

• For each student you enroll in an ACT or SAT prep program, you also provide that student a Huntington Online Prep program for online access to ACT or SAT practice tests.

• You pay Huntington a fee for each student to whom you provide Huntington Online Prep.

15.  Accreditation:  $600 Visit Management Fee;  $650 Annual Fee, plus $100 Administrative Fee to Huntington

• Due Date:  Upon billing.

• The accrediting body sets its fees and may change them.

• The Visit Management Fee is for Huntington’s initial and renewal visits; currently, it renews every 7 years.

• The Annual Fee is to maintain accreditation. You pay Huntington these fees and it pays the accrediting body.

• If you do not apply for, or maintain, accreditation, you pay Huntington $500 per month.

16.  Transfer:  in general, the greater of $15,000 or 35% of then-current, non-discounted maximum initial franchise fee

• Due Date:  When you request consent to transfer.

• In addition to the transfer fee, the buyer pays a reduced initial franchise fee of $17,000. Huntington waives the transfer fee and initial franchise fee for transfer to your franchisee entity within 90 days of the Transfer Agreement Date.

• For certain transfers, the transfer fee is $1,000.

• If you sell the Franchised Business for $25,000 or less, the initial franchise fee is $10,000 and Huntington waives the transfer fee.

17.  Subsequent Franchise Agreement:  greater of $15,000 or 35% of then-current maximum non-discounted initial franchise fee

• Due Date:  Upon signing the Subsequent Franchise Agreement.

18.  Relocation:  $500

• Due Date:  When you request to relocate.

• Payable if you wish to relocate your Franchised Business.

19.  Insurance:  your insurance company determines the amount; about $1,800 to $4,700 per year, excluding workers’ compensation

• Due Date:  As required by vendors.

• Payable to your insurance company, which must be “A-” or better rated.

• If you do not obtain or maintain insurance, Huntington may obtain it for you and you pay Huntington’s cost.

20.  Taxes:  will vary

• Due Date:  Upon billing.

• You pay Huntington any taxes it pays on any amount you pay it.

• These are not typical and Huntington cannot estimate them.

21.  Audit:  cost of audit; $100 late fee; 18% annual interest

• Due Date:  Upon billing.

• Payable if audit shows you failed to meet Huntington’s quality requirements; kept false books; submitted false reports, or reports that understate Gross Revenue or enrollment by 3% or more, or otherwise substantially incorrect.

22.  Late Fee; Interest:  $100 late fee; 18% annual interest

• Due Date:  Upon billing.

23.  Attorneys’ Fees:  cost of action; attorneys’ fees

• Due Date:  Upon billing.

24.  Indemnification:  cost of claim against Huntington; attorneys’ fees

• Due Date:  Upon billing.

25.  Reimbursement of Third Party Costs:  will vary

• Due Date:  Upon billing.

• You reimburse Huntington for its expenses in connection with your Franchised Business, including fees Huntington pays attorneys, accountants, architects, agents, brokers, accrediting agencies, and consultants.