If you are considering a PizzaRev franchise, don’t get blindsided by these 21 important franchise fees (from the initial franchise fee, to the royalty fee, to 19 other fees found in Items 5 and 6 of PizzaRev’s 2017 FDD).
1. Initial Fee: $25,000 to $30,000
- If you sign a Franchise Agreement for a single PizzaRev Restaurant, you will pay PizzaRev a nonrefundable Initial Fee of $30,000. If you sign an Area Development Agreement, you will pay PizzaRev a nonrefundable Initial Fee of $25,000 for each Restaurant you are required to open under the Area Development Agreement.
- You must pay the Initial Fee in full when you sign the Franchise Agreement. Except as disclosed in this Item, the amount of the Initial Fee charged by PizzaRev is uniform.
2. Training Fee: $5,000
- If you sign an Area Development Agreement, you must also pay PizzaRev a nonrefundable Training Fee of $5,000 when you sign the Franchise Agreement for the first Restaurant to be opened in the Territory.
- You must sign the Franchise Agreement for the first Restaurant in your Territory when you sign the Area Development Agreement.
- The Training Fee is only payable for the first Restaurant in the Territory.
3. Development Fee: $10,000 multiplied by the number of PizzaRev Restaurants that you must develop in your Territory
- If you sign an Area Development Agreement, you must pay PizzaRev a Development Fee equal to $10,000 multiplied by the number of PizzaRev Restaurants that you must develop in your Territory under the Area Development Agreement.
- You will pay the Development Fee in full when you sign the Area Development Agreement. The Development Fee is nonrefundable and fully earned by PizzaRev when the Development Fee is paid by you.
- PizzaRev will apply $10,000 of the Development Fee to the Initial Fee for each Restaurant you are required to open under the Area Development Agreement.
4. Continuing Fees: 5% of weekly Revenues
- Due Date: Wednesday each week for the preceding week.
- Payable each week after the Restaurant commences business.
- The term “Revenues” is defined in the Franchise Agreement as the total dollar sales for your Restaurant. Excluded from the definition of Revenues are sales, use, or gross receipts taxes, gift card sales, the value of complimentary Foods, Beverages, and Products, or the one-time sale of any furniture, fixtures, and equipment (FF&E) or inventory items.
5. Production Fees: currently 1% of weekly Revenues; can be increased to up to 3%
- Due Date: Wednesday each week for the preceding week.
- Deposited in the advertising and marketing production fund (the “Production Fund”) controlled by PizzaRev.
6. Audit Fees: estimated to range from $5,000 to $10,000
- Due Date: Within 10 days after receipt of an invoice indicating the amount owed to PizzaRev.
- Amount incurred by PizzaRev to audit your PizzaRev Restaurant business; payable only if an audit shows that you understated your Revenues by more than 2% in any month, quarter, or year.
7. Assignment Fee: $7,500
- Due Date: On or before the date of the assignment.
- You must obtain PizzaRev’s prior approval for an assignment.
- The Assignment Fee does not apply to the assignment of any Ownership Interests in the Franchisee to another Owner or a relative of an Owner.
8. Collection Costs: varies
- Due Date: On demand.
- Amount incurred by PizzaRev to collect unpaid Fees; includes attorneys’ fees and related costs.
9. Administrative Fee: $250
- Due Date: On demand.
- Applies to past due payments payable to PizzaRev.
10. Interest Charges: the lesser of 18% per annum or the maximum legal rate allowable by applicable law
- Due Date: On demand.
- Applies to past due payments payable to PizzaRev.
11. New Management Staff Training: then-current fee, which is currently $500 per day of training; and the Travel Expenses of each trainer
- Due Date: Within 10 days after receipt of an invoice indicating the amount owed to PizzaRev.
- Payable if you hire new Management Staff employees.
- Travel Expenses are payable if training is provided at your Restaurant.
12. Opening Assistance Change Costs: costs incurred by PizzaRev to reschedule opening assistance at Restaurant; this amount will not exceed $5,000
- Due Date: Within 10 days after receipt of an invoice indicating the amount owed to PizzaRev.
- Payable if it is necessary to reschedule the dates for the opening assistance provided by the Opening Team at your Restaurant.
13. On-site Training or Consulting Fees: then-current fee, which is currently a per diem amount of $500 for each trainer, plus the Travel Expenses of each trainer
- Due Date: Within 10 days after receipt of an invoice indicating the amount owed to PizzaRev.
- Payable if PizzaRev conducts additional training at your Restaurant, you need more than seven days of opening assistance, or you request that consulting assistance be provided at your Restaurant.
14. Relocation Fee: $5,000
- Due Date: On the date you receive approval from PizzaRev to relocate the Restaurant to a new Franchised Location.
- Payable only if you request and receive approval from PizzaRev to relocate the Franchised Location.
15. Reacquisition Fee: 25% of the Initial Fee in the then-current standard Franchise Agreement
- Due Date: When you sign a new Franchise Agreement.
- Payable only if, after the expiration of your Franchise Agreement, you meet all requirements and reacquire the franchise for your PizzaRev Restaurant.
16. Local Advertising Fee: 1% of quarterly Revenues
- Due Date: Payable to Local Advertising Association.
- You must spend at least 1% of your quarterly Revenues on approved Local Advertising.
- When there are two or more PizzaRev Restaurants in your DMA, PizzaRev may require that you contribute Local Advertising Fees equal to 1% of your quarterly Revenues to a Local Advertising Association (“LAA”).
- If a local advertising group (a “Local Advertising Association”or “LAA”) is established for the Designated Market Area (“DMA”) in which your Restaurant is located, the Local Advertising Fee paid by you to the LAA will be applied to your 1% Local Advertising requirement.
- The Members participating in and contributing to the LAA will include the franchised PizzaRev Restaurants and the Restaurants owned and operated by PizzaRev or an affiliate located in the DMA.
- Each Member will have one vote for each franchised or company-owned Restaurant owned by it in the DMA.
17. Design Review Fee: $500 per additional review
- Due Date: On demand.
- Payable if during the approval process, it is necessary for PizzaRev to review the drawings, plans, and specifications for your Restaurant more than one time.
18. Review of Unapproved Supplier: estimated to range from $2,500 to $5,000
- Due Date: Within 10 days after receipt of an invoice indicating the amount owed to PizzaRev.
- You must reimburse PizzaRev for the expenses it incurs inspecting or evaluating an unapproved supplier; payable only if you request that PizzaRev review and approve a previously unapproved supplier.
19. Registration Fees: then-current registration fee for the event
- Due Date: When you register for a convention, meeting, seminar, franchisee gathering, or other group session.
- Your Operating Partner, Multi-Unit Manager, and all other individuals designated by PizzaRev will attend each group event held by PizzaRev. PizzaRev will determine the topics covered, duration, dates, and locations of all such events.
- If you fail to attend or to send a representative to a required group event, you will be responsible for obtaining the materials distributed at the group event, at your cost.
Area Development Agreement
20. Assignment Fee: $7,500
- Due Date: On or before the date of the assignment.
- You must obtain PizzaRev’s prior approval for an assignment. The Assignment Fee does not apply to the assignment of any Ownership Interests in the Area Developer to another Owner or a relative of an Owner.
21. Extension Fees: $2,500
- Due Date: Payable when you request an extension of a deadline in the Development Schedule of your Area Development Agreement.
- You can request one 90-day extension of each deadline in the Development Schedule in the Area Development Agreement.
- If you request a 90-day extension of any deadline in the Development Schedule, an Extension Fee of $2,500 must accompany each extension request you make to PizzaRev.
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