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Considering a Häagen-Dazs Franchise? Don’t Overlook These 14 Important Franchise Fees

by Franchise Chatter on August 31, 2017

in Franchise Fees, Frozen Dessert Franchise, Ice Cream Franchise

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If you are considering a Häagen-Dazs franchise, don’t get blindsided by these 14 important franchise fees (from the initial franchise fee, to the royalty fee, to 12 other fees found in Items 5 and 6 of Häagen-Dazs’s 2017 FDD).

1.  Initial Franchise Fee:  $10,000 to $30,000

  • Before you open for business, you must pay Häagen-Dazs an Initial Franchise Fee. The Initial Franchise Fee varies from $10,000 to $30,000, depending upon whether you are new to the Häagen-Dazs System. The Initial Franchise Fee described above applies to a franchise for a new Häagen-Dazs Shop.
  • The Initial Franchise Fee for a new Shop is $30,000 if you are a new franchisee. You must pay an initial installment, in the amount of $3,000, at the same time that you sign the Franchise Agreement.
  • You will be required to pay the balance of the Franchise Fee within 15 days after Häagen-Dazs designates the Shop Premises.
  • The franchise term will be 10 years from the date you open your Shop, unless you are unable to open your Shop within 2 years, in which case, among other possibilities, the term of your Franchise can be less than 10 years.
  • As more particularly described in Item 11, Häagen-Dazs has the option to refund all but fifty percent of the Initial Franchise Fee, if it declines to designate the Proposed Site as the Shop Premises, or if you elect to cancel the Franchise Agreement before it designates the Shop Premises.
  • The Initial Franchise Fee for a new Häagen-Dazs Shop is uniform as to all franchisees, except that existing Häagen-Dazs Shop franchisees can purchase a franchise for a new Shop for $15,000, instead of the $30,000 paid by someone entering the Häagen-Dazs System.
  • Häagen-Dazs is participating in the International Franchise Association VetFran program. If you are a qualified United States armed forces veteran, you are eligible for a 25% discount on the Initial Franchise Fee for your first Häagen-Dazs Shop, which represents a savings of $7,500. The discount will be applied to your Initial Franchise Fee.

2.  Häagen-Dazs Brand Frozen Dessert Products:  $6,000 to $10,000

  • In addition to these fees, you will purchase Häagen-Dazs brand frozen dessert products from Häagen-Dazs’s affiliate, NDIC. Häagen-Dazs estimates that your opening inventory of Häagen-Dazs brand frozen dessert products will cost approximately $6,000 to $10,000, and is non-refundable.

3.  Application Expenses:  expenses you incur in connection with the interview, including all of your travel, lodging, food, and other expenses.

  • If you are applying for your first Häagen-Dazs Franchise, then you must come to Minneapolis for an interview as part of the application process. You will pay all of the expenses you incur in connection with the interview, including all of your travel, lodging, food, and other expenses.
  • Häagen-Dazs will not reimburse you for any expenses under any circumstances.

4.  Continuing Royalty Fee:  4% of Gross Sales

  • Due Date:  Payable weekly (or less frequently as determined by Häagen-Dazs).
  • The Franchise Agreement defines gross sales to include anything you sell from your Shop, even if sold in violation of your Franchise Agreement.

5.  General Marketing Contribution:  $5,100 per year for a Shop (at this time); $2,550 per year for a Satellite (at this time)

  • Due Date:  Payable monthly.
  • The General Marketing Contribution is $5,100 per year as of the date of the 2017 Franchise Disclosure Document, and is subject to further annual increases in accordance with a formula in the Franchise Agreement tied to the Consumer Price Index.
  • Häagen-Dazs may, but need not, delay periodic increases. Häagen-Dazs could have increased the rate to as much as $5,375 per year for 2017, based on the formula set forth in the Franchise Agreement.

6.  Local Marketing Contribution:  1% of Gross Sales

  • Due Date:  Payable weekly (or less frequently as determined by Häagen-Dazs).
  • Your Local Marketing Contribution will equal 1% of your gross sales. The Local Marketing Fund your Local Marketing Contributions create will be used by Häagen-Dazs for Local Marketing Activities that it thinks will be of some benefit to your Shop, or will be made available to you on a reimbursement basis for Local Marketing Activities approved by Häagen-Dazs and undertaken by you.
  • If Häagen-Dazs elects to make the Local Marketing Funds available to you on a reimbursement basis, but you do not become entitled to a portion of those Local Marketing Funds within the time periods that Häagen-Dazs occasionally establishes, then the portion to which you do not become entitled will be used by Häagen-Dazs in the same manner as your General Marketing Contribution.
  • If you are purchasing a Satellite Agreement, then the amount you will pay will be based on the percentage, if any, that the Franchise Agreement for your related Shop requires you to pay.

7.  Transfer Fee:  $7,500

  • Due Date:  Payable when written documentation of the proposed transfer is sent to Shoppe Company.
  • Häagen-Dazs may temporarily reduce and reinstate this fee, occasionally at its discretion, in accordance with special transfer policies it implements.

8.  Inspection Fees:  $100 per hour, plus actual expenses

  • Due Date:  When incurred.
  • If an inspection of your Shop discloses violations of applicable System standards previously noted in an earlier Shop inspection, then Häagen-Dazs may require you to reimburse it for the cost of the second inspection at the rate of $100 per hour plus expenses.

9.  Audit Fees:  costs of audit, including legal fees

  • Due Date:  When incurred.
  • If you submit materially inaccurate financial information in connection with the payment of royalties or marketing contributions, or do not permit inspection of your books and records.

10.  Alternative Supplier Review Fee:  all reasonable expenses incurred

  • Due Date:  When incurred.
  • In certain limited circumstances, you may seek approval of alternative sources of supply for certain items.

11.  Remedial Training Fee:  all reasonable expenses incurred

  • Due Date:  When incurred.
  • In lieu of declaring a breach, Häagen-Dazs may, but need not, require you to attend a remedial training session to address operational deficiencies.

12.  Remedial Costs and Administrative Fee:  all expenses incurred to correct non-conforming condition

  • Due Date:  When incurred.
  • Häagen-Dazs may correct or arrange for the correction of operational deficiencies that you have failed to correct, in which case you must reimburse it for the costs it incurs, plus pay it an administrative fee equal to 15% of the costs it incurs.

13.  Late Payment Charge:  10% of late payment; interest at up to 18% per year

  • Due Date:  Upon failure to timely pay amounts owed.
  • Häagen-Dazs may, but is not required to, impose late payment charges and interest on late payments.

14.  Renewal Fee:  50% of then-current franchise fee being charged to existing franchisees for a new, traditional Häagen-Dazs Shop

  • Due Date:  In connection with entering into a successive term Franchise Agreement.
  • If you are now entering into a Franchise Agreement in connection with a new Häagen-Dazs Shop, then, when that Franchise Agreement expires, if you meet the applicable requirements, you will be able to enter into a successive term Franchise Agreement to continue to operate your Shop beyond the expiration date of the Franchise Agreement you are now entering into.

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