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Considering a Charleys Philly Steaks Franchise? Don’t Overlook These 18 Important Franchise Fees

by Franchise Chatter on August 11, 2017

in Franchise Fees, Sandwich Franchise

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

Charley's Philly Steaks Gourmet Combo

If you are considering a Charleys Philly Steaks franchise, don’t get blindsided by these 18 important franchise fees (from the initial franchise fee, to the royalty fee, to 16 other fees found in Items 5 and 6 of Charleys Philly Steaks’ 2017 FDD).

1.  Initial Franchise Fee:  $15,000 to $24,500

  • You must pay Charleys an initial franchise fee in the amount of $24,500 for your first Restaurant ($15,000 for your second and any subsequent Restaurant) when you sign the Franchise Agreement.
  • The initial franchise fee is deemed fully earned upon payment and is non-refundable.
  • Generally, the initial franchise fee is uniformly imposed on Charleys franchisees; however, in certain unique circumstances, Charleys may reduce or waive a fee for a particular franchisee. In Charleys’ last fiscal year, it reduced the initial franchise fee for two franchisees with short-term agreements.

2.  Royalty:  the greater of (a) $300 or (b) 6% of your Gross Sales

  • Due Date:  Royalty fees are payable on or before Thursday of each week based on the Gross Sales incurred during the immediately preceding week.

3.  Advertising and Promotion Obligation (“APO”):  currently 3% of Gross Sales (0.25% to the Marketing Fund and 2.75% for Local Store Marketing)

  • Due Date:  Marketing Fund and advertising cooperative contributions are payable with the royalty fees. Local Store Marketing expenditures are not paid to Charleys but must be reported quarterly.
  • The APO will not exceed 5% of Gross Sales. Charleys reserves the right to increase your APO and it may reallocate the APO among the Marketing Fund, Local Store Marketing, and an advertising cooperative.
  • Charleys does not currently require you contribute to an advertising cooperative.

4.  Marketing, Advertising, and Promotional Materials:  $500 to $2,000

  • Due Date:  Payment due upon order.
  • You may purchase marketing, advertising, and promotional materials at cost, plus any related administrative, shipping, handling, and storage charges.

5.  Transfer Fee:  the greater of $10,000 or Charleys’ costs incurred in connection with the transfer

  • Due Date:  Upon transferring the franchise.
  • Transfers are subject to Charleys’ approval.

6.  Failed Inspection Fee:  $500 to $1,500

  • Due Date:  Upon demand.
  • If you fail an operations inspection, you must pay Charleys’ then-current quality assurance program fees and reimbursement of its expenses.

7.  Miscellaneous Administrative Fees:  Charleys’ reasonable fees (including recovery of its direct costs), which range between $500 to $1,500

  • Due Date:  As incurred.
  • Administrative fees will be charged on the same basis as for substantially all franchised Charleys Philly Steaks Restaurants in the United States.

8.  Ongoing Training:  currently, $1,500 to $3,500 per program

  • Due Date:  As incurred.
  • Charleys has the right to charge you a fee to attend ongoing training programs that it offers.

9.  Late Charge and Interest on Late Payments:  the late charge is currently $50; the interest charge is the lesser of 12% per annum or the maximum rate permitted by law

  • Due Date:  Immediately.
  • You must pay Charleys’ then-current late fee and interest on money you owe Charleys or any of its affiliates after the due date.

10.  Service Payments:  currently, $50

  • Due Date:  Immediately.
  • You must pay Charleys a reasonable service fee if you fail to maintain sufficient funds in your designated bank account.

11.  Site Selection Extension:  $2,500

  • Due Date:  Upon receipt of Charleys’ bill.
  • Payable if Charleys agrees, in its sole discretion, to extend your site selection period (180 days after signing the Franchise Agreement).

12.  Special Assistance:  currently, out-of-pocket expenses

  • Due Date:  Upon receipt of Charleys’ bill.
  • Charleys may impose reasonable inspections and supervision fees to cover its costs in evaluating alternative approved brands or suppliers you suggest.

13.  Audit:  cost of audit

  • Due Date:  Upon receipt of Charleys’ bill.
  • Payable only if you fail to furnish required information or if Charleys finds an understatement of Gross Sales greater than 1%.

14.  Insurance:  will vary under circumstances

  • Due Date:  As incurred.
  • If you fail to obtain the required insurance coverage for the restaurant, Charleys may obtain such coverage at your expense.

15.  Maintenance Costs:  will vary under circumstances

  • Due Date:  As incurred.
  • If you fail or refuse to maintain your Restaurant as required, Charleys has the right to do so on your behalf and at your expense.

16.  Attorneys’ Fees and Other Costs:  will vary under circumstances

  • Due Date:  As incurred.
  • Payable if you fail to comply with the Franchise Agreement or if Charleys is joined in a lawsuit that is based on your operation of a Restaurant.

17.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.
  • You must reimburse Charleys for its losses and expenses as a result of third-party claims arising from your failures or breaches under the Franchise Agreement, your operation of the Restaurant, your failure to comply with applicable laws, and any unauthorized acts.

18.  POS Support Contract:  $150 per month for up to two POS terminals and two kitchen video displays; and $190 per month for three POS terminals and three kitchen video displays

  • Due Date:  As incurred.
  • You are required to purchase a support contract for your POS System. The fees are payable to ParTech, Inc.

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