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Considering an Andy’s Frozen Custard Franchise? Don’t Overlook These 19 Important Franchise Fees

by Franchise Chatter on July 27, 2017

in Franchise Fees, Frozen Dessert Franchise



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

Andy's Frozen Custard Photo by Rinabobina

If you are considering an Andy’s Frozen Custard franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Andy’s Frozen Custard’s 2017 FDD).

1.  Initial Franchise Fee:  $28,000 to $32,000



  • You must pay Andy’s Frozen Custard an initial franchise fee in a lump sum when you sign the Franchise Agreement. Andy’s standard initial franchise fee currently is $32,000.
  • If you are an existing franchisee in good standing and buy a second or additional franchise, the initial franchise fee currently is $28,000 for each additional unit.
  • Initial franchise fees under Franchise Agreements are fully earned when paid and are not refundable under any circumstances, except as provided below.
  • If Andy’s determines that you (or your managing owner) cannot complete initial training to its satisfaction, it may terminate the Franchise Agreement and keep 2/3 of the initial franchise fee. Andy’s will return the other 1/3 to you if you sign its required form of release of claims.
  • Andy’s uses the initial franchise fee to cover the costs of evaluating your proposed site, training you and your employees, and helping you develop and open your Store.

2.  Development Fee:  $14,000 multiplied by the number of Andy’s Frozen Custard Stores you agree to develop in the Development Area

  • You must pay Andy’s a lump sum development fee when you sign the Development Rights Agreement. Your development fee is $14,000 multiplied by the number of Andy’s Frozen Custard Stores you agree to develop in the Development Area.
  • Andy’s will insert this fee in the Development Rights Agreement before signing it. The development fee is not refundable under any circumstances, but Andy’s will apply $14,000 of the development fee toward the initial franchise fee owed under each Franchise Agreement that the Development Rights Agreement covers.
  • The minimum number of Stores required to be opened under the Development Rights Agreement is 3.
  • Franchisees signing Franchise Agreements during 2016 paid Andy’s initial fees of $28,000. Two franchisees signed Development Rights Agreements with Andy’s during 2016. Their development fees ranged from $28,000 to $84,000.

3.  Continuing Service and Royalty:  6% of Store’s weekly Gross Sales, but 5% of Gross Sales over $1 million

  • Due Date:  Due on Wednesday of each week on Gross Sales during previous week ending Sunday.
  • “Gross Sales” means all of your revenue from operating the Store, but excluding taxes collected from customers and paid to a taxing authority, and reduced by the amount of any documented refunds, credits, allowances, and chargebacks the Store in good faith gives to customers.

4.  Advertising and Development Fund:  up to 2% of Store’s weekly Gross Sales; currently, 1% of Gross Sales

  • Due Date:  Due on Wednesday of each week on Gross Sales during previous week ending Sunday.

5.  Local Advertising:  3% of Store’s Gross Sales

  • Due Date:  As incurred.
  • You must spend this amount on local advertising.

6.  Cooperative Advertising Programs:  up to 3% of the Store’s Gross Sales (although 67% or more of the Andy’s Frozen Custard Stores operating in a defined Advertising Coverage Area may vote to increase this amount)

  • Due Date:  As Cooperative Program directs.

7.  Additional Training or Assistance:  currently, Andy’s charges $150 per day plus expenses for training at its location, and $250 per day plus expenses for training at your Store



  • Due Date:  When training or assistance begins.
  • Andy’s provides initial training for 2 people at no cost. It may charge you for initial training of more than 2 people; for training newly-hired personnel; for refresher training courses; for the annual convention; and for additional or special assistance or training you need or request.

8.  Transfer:  60% of Andy’s then-current initial franchise fee

  • Due Date:  Before transfer completed.
  • No charge if Franchise Agreement is transferred to an entity you control.

9.  Product and Service Purchases:  will vary under circumstances

  • You will buy products and services from Andy’s, its affiliates, designated and approved vendors whose items meet Andy’s standards and specifications, and/or other suppliers to the industry.

10.  Testing:  costs of testing

  • Due Date:  When billed.
  • This covers the costs of testing new products or inspecting new suppliers you propose.

11.  Computer Systems, Maintenance, and Support:  costs of service

  • Due Date:  As incurred.
  • Andy’s or a third party may charge you a fee for any proprietary software or technology that it, its affiliates, or a third party licenses to you and for other maintenance and support services that Andy’s or a third party might provide in the future.
  • Andy’s does not currently provide these services but may charge you for them if it chooses to provide them in the future. Certain services may be provided through a third party that offers an Internet-based reporting system for which it currently charges $150 a month.

12.  Audit:  cost of inspection or audit

  • Due Date:  15 days after billing.
  • Due if you do not give Andy’s reports, supporting records, or other required information, or understate required Royalties or Fund contributions by more than 2%.

13.  Interest:  lesser of 1.5% per month or highest commercial contract interest rate law allows



  • Due Date:  15 days after billing.
  • Due on all overdue amounts.

14.  Maintenance and Refurbishing of Store:  you must reimburse Andy’s expenses

  • Due Date:  15 days after billing.
  • If, after Andy’s notifies you, you do not undertake efforts to correct deficiencies in the Store’s appearance, then Andy’s can undertake the repairs and you must reimburse its costs.

15.  Insurance:  you must reimburse Andy’s costs

  • Due Date:  15 days after billing.
  • If you fail to obtain insurance, Andy’s may obtain insurance for you and you must reimburse Andy’s.

16.  Insufficient Funds Processing Fee:  $100

  • Due Date:  As incurred.
  • Due if you have insufficient funds in your EDTA to cover a payment, or, if you pay by check, a check is returned for insufficient funds.

17.  Management Fee:  $500 per person per day (plus costs and expenses)

  • Due Date:  As incurred.
  • Due when Andy’s (or a third party) manages the Store after your or your managing owner’s death or disability or after your default or abandonment.

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

  • Due Date:  As incurred.
  • Due when you do not comply with the Franchise Agreement or Development Rights Agreement.

19.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.
  • You must reimburse Andy’s if it is held liable for claims from your Store’s operation or breach of the Franchise Agreement or Development Rights Agreement.

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