Considering a Johnny Rockets Franchise? Don’t Overlook These 22 Important Franchise Fees

Updated July 15, 2019.

If you are considering a Johnny Rockets franchise, don’t get blindsided by these 22 important franchise fees (from the initial franchise fee, to the royalty fee, to 20 other fees found in Items 5 and 6 of Johnny Rockets’ 2019 FDD).

1.  Initial Franchise Fee:  $25,000

• Subject to the provisions below, Johnny Rockets currently charges an Initial Franchise Fee of $25,000 per Restaurant.

• Unless you have signed an Area Development Agreement, the Initial Franchise Fee is due in one lump sum when you sign the Restaurant Franchise Agreement. No portion of the Initial Franchise Fee is refundable.

• To provide support to the veterans of the United States military, Johnny Rockets offers qualified United States military veterans a 25% discount on the Initial Franchise Fee.

2.  Area Development Fee:  $10,000 multiplied by the number of Restaurants to be developed

• If you enter into an Area Development, you must pay Johnny Rockets an Area Development Fee equal to $10,000 multiplied by the number of Restaurants to be developed.

• The Area Development Fee is due in one lump sum when you sign the Area Development Agreement. For each Restaurant you develop under the Area Development Agreement, you will receive a credit of $10,000 against the Initial Franchise Fee when you sign the Restaurant Franchise Agreement for the particular Restaurant.

3.  Training Fee:  no charge for you and up to three additional persons; $1,500 for each additional individual that attends Johnny Rockets’ entire Restaurant Management Training Program

• For your first Restaurant, there is no charge for you (or, in the case where you are a corporation or other legal entity, a principal or your “Control Person”) and up to three additional persons you designate as the managers or assistant managers responsible for the operation of the Restaurant to attend Johnny Rockets’ Management Training Program.

• You will be required to pay Johnny Rockets for any additional training it provides to you or your employees. For Restaurants, Johnny Rockets charges a Management Training Fee of $1,500 for each additional individual that attends its entire Restaurant Management Training Program.

4.  Development Agreement Schedule Extension Payments:  not more than $10,000 per month

• Johnny Rockets may, in its sole discretion, grant you one or more extensions to the Development Schedule in a Development Agreement, provided that you shall pay Johnny Rockets a fee of not more than $10,000 per month for each Restaurant for each extension.

5.  Royalty Fee:  5% of weekly Net Sales

• Due Date:  Payable weekly for the calendar week ending on Sunday at 12:00 p.m. on or before Friday of the next week.

6.  Marketing Fund Fee:  up to 4% of weekly Net Sales. Currently, the weekly Marketing Fund Fee is 1.75%, but Johnny Rockets may increase the fee to an amount not to exceed 4%.

• Due Date:  Same as weekly Royalty Fee.

7.  Additional Advertising Contribution:  a variable percentage of Net Sales if the owner(s) of at least two-thirds of the participating Restaurants in your advertising market agree to pay the additional contribution. If Johnny Rockets Restaurants, LLC operates two-thirds or more of the Restaurants
in your advertising market, your total Additional Advertising Contributions at any one time cannot exceed 0.50% of Net Sales.

• Due Date:  Same as Royalty above, but only as, if, and when two-thirds of the participating Restaurants in your advertising market agree to pay the additional contribution.

8.  Cooperative Advertising:  up to 2.75% of weekly Net Sales

• Due Date:  To be established by each Co-Op Advertising Region.

• If Johnny Rockets establishes a Co-Op Advertising Region, Johnny Rockets presently anticipates that it will be governed by written articles and bylaws, which will be approved by a majority vote, based on one vote per Johnny Rockets Restaurant owned in each region.

• If Johnny Rockets forms a Co-Op Advertising Region, you must contribute to the Co-Op. Any amount you contribute to the Co-Op will be credited against your Marketing Fund Fee.

• Any corporate-owned Restaurants located in a Co-Op Advertising Region will contribute to the Co-Op.

9.  Local Advertising:  2% of Net Sales

• Due Date:  Not paid to Johnny Rockets. You must spend 2% of Net Sales annually on local advertising for your Restaurant.

• Includes advertising published in local newspapers and promotional merchandise distributed to the local community. All local advertising must be submitted to Johnny Rockets for its prior written approval.

• The local advertising expenditure is in addition to the Marketing Fund Fee and any Cooperative Advertising requirement.

10.  Renewal Fee:  half of Johnny Rockets’ then-current initial franchise fee (which currently would be $12,500)

• Due Date:  Upon the signing of the renewal Franchise Agreement.

11.  Reimbursement of Insurance Costs:  cost of obtaining coverage

• Due Date:  On demand.

• You must pay only if you fail to maintain or procure required insurance coverage and Johnny Rockets obtains coverage for you.

12.  Reimbursement of Repair Costs:  cost of repairs

• Due Date:  On demand.

• If Johnny Rockets discovers any defects or unsatisfactory conditions at your Restaurant and you fail to correct or repair the condition, you must reimburse Johnny Rockets for its repair costs and expenses, including meals, lodging, wages, and transportation for Johnny Rockets’ personnel inspecting the Restaurant.

13.  Transfer Fee:  $10,000

• Due Date:  When you transfer your assets, the agreement, or an ownership change.

• There is no Transfer Fee if you transfer upon your death or disability, or you transfer to a legal entity formed solely for convenience of ownership.

• Transfers are subject to Johnny Rockets’ prior written consent and its then-current franchisee approval process and standards.

14.  Audit:  all amounts shown to be due, plus (i) interest equal to the lower of the maximum rate permitted by law or 15% per annum of the deficient amount; (ii) a late fee, for additional administrative fees, incurred by Johnny Rockets, equal to the greater of 10% of the deficient amount or $250; and (iii) the cost of the audit

• Due Date:  On demand.

• You must pay audit costs only if audit shows an understatement of 1% or more of Net Sales for any period.

• Interest begins to accrue from the date of the underpayment.

15.  Late Charge:  the greater of 10% of the amount due or $250, plus interest at the lower of the maximum rate permitted by law or 18% of the amount past due, from the date a payment was due until it is paid

• Due Date:  Begins to accrue on the date the past due amount was due and continues to accrue until the past due amount is paid in full, including all Late Charges.

16.  Costs and Attorneys’ Fees:  Johnny Rockets’ costs and expenses

• Due Date:  As incurred.

• If Johnny Rockets prevails in any legal action arising out of your agreements with it, or a third party brings a legal action against Johnny Rockets due to your actions or inactions, you must pay Johnny Rockets’ attorneys’ fees and costs.

17.  Indemnification:  the losses and expenses incurred by Johnny Rockets

• Due Date:  As incurred.

• You must indemnify and hold Johnny Rockets and its affiliates harmless in all actions arising out of or resulting from the development or operation of your Restaurant.

18.  Supplier Review Fee:  you must reimburse Johnny Rockets for all costs and expenses incurred by it in reviewing or approving a supplier proposed by you, including any travel and lodging expenses it incurs

• Due Date:  As incurred.

• Except for those Approved Products where Johnny Rockets has a designated single source approved supplier, you may request the right to purchase a product or supply not yet approved by Johnny Rockets and/or from a supplier not yet approved in writing by Johnny Rockets, after it has an opportunity to review and approve or disapprove of the supply or supplier.

19.  Taxes:  you must reimburse Johnny Rockets for any state or local taxes imposed on it due to its receipt or accrual of the Initial Franchise Fee, Royalty Fee, Marketing Fund Fee, or other fees it collects under the terms of the Franchise Agreement

• Due Date:  On demand.

20.  Relocation:  Johnny Rockets’ costs and expenses, which likely will be between $500 and $5,000

• Due Date:  On demand.

21.  InMoment Fee:  $115.38 quarterly

• Due Date:  As incurred.

• InMoment is a customer feedback tool. You pay the InMoment Fee to Johnny Rockets and it passes this fee through to InMoment.

22.  EcoSure Fee:  approximately $330 twice per year

• Due Date:  As incurred.

• EcoSure is an independent third-party health and safety audit conducted twice per year. You pay the EcoSure Fee to Johnny Rockets and it passes this fee through to EcoSure.