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Considering a Costa Vida Franchise? Don’t Overlook These 37 Important Franchise Fees

by Franchise Chatter on September 9, 2017

in Franchise Fees, Mexican Restaurant Franchise



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If you are considering a Costa Vida franchise, don’t get blindsided by these 37 important franchise fees (from the initial franchise fee, to the royalty fee, to 35 other fees found in Items 5 and 6 of Costa Vida’s 2017 FDD).

1.  Initial Franchise Fee:  $30,000



  • You must pay an initial franchise fee (the “Franchise Fee”) of $30,000, which is due and payable when you sign a Franchise Agreement for your Restaurant. The Franchise Fee represents payment to Costa Vida for the right to use its Marks, recipes, and the Costa Vida System in the development and operation of your Restaurant.
  • The Franchise Fee also covers the cost of certain services that Costa Vida and its Affiliates may provide to you before your Restaurant opens, such as prototypical plans, marketing materials, and training.
  • This Franchise Fee is fully earned upon payment and is non-refundable. You must pay the Franchise Fee in a lump sum upon your signing of the Franchise Agreement.
  • If you purchase a Costa Vida Restaurant and Franchise Agreement from another franchisee, you or the selling party must pay to Costa Vida prior to the effective date of the transfer its then-current Transfer Fee, which at the time of the 2017 Disclosure Document is $10,000.
  • After a Franchise Agreement has been signed, the Franchise Fee is not refundable in whole or in part. The $30,000 Franchise Fee is uniform to all franchisees currently purchasing a franchise.

2.  Development Fee:  $15,000 for each Costa Vida Restaurant to be opened under the Development Schedule

  • Although Costa Vida franchises are site-specific and Costa Vida does not automatically or by default grant territories for development, it may in some instances enter into an Area Development Agreement with a qualified franchisee who wishes to develop multiple Restaurants within a certain length of time after signing a Franchise Agreement.
  • Under the Area Development Agreement, you must pay, when you sign the ADA, a development fee of $15,000 (the “Development Fee”) for each Costa Vida Restaurant to be opened under the Development Schedule.
  • The number of Costa Vida Restaurants that you may develop under a particular ADA is determined by mutual agreement.
  • The ADA and the Franchise Agreement are signed simultaneously, and you must pay the Development Fee and the Franchise Fee at that time. You will pay the then-current Franchise Fee for each of your subsequent Restaurants at the time you sign the then-current form of the Franchise Agreement for those Restaurants.
  • The Franchise Fee associated with each Costa Vida Restaurant you are required to develop under an ADA is based on the Franchise Fee described in the then-current Franchise Disclosure Document. Costa Vida will apply $15,000 of the previously paid Development Fee under the ADA against the Franchise Fee payable under each subsequent Franchise Agreement entered into under the terms of the ADA.
  • However, no portion of the Development Fee is refundable under any circumstances.

3.  Products:  $34,000 to $51,000

  • Before opening your Restaurant, you must purchase certain products from Costa Vida or its Affiliates, including initial inventories of mandatory branded clothing, uniforms, marketing materials, and similar items. Costa Vida estimates that these initial fees will range from $34,000 to $51,000.

4.  All Décor and Furniture, as well as the Initial Inventories of Mandatory Branded Clothing, Uniforms, Marketing Materials, and Similar Items You Need to Open Your Restaurant:  $553,000 to $1,054,000

  • You must also order and purchase or lease all required equipment, furnishings, fixtures, and signs for your Restaurant.
  • Once you have executed the lease for your site, Costa Vida will work with you to secure from its approved vendors, the required equipment, furnishings, fixtures, and signs for your Restaurant.
  • Costa Vida estimates that the total cost of this will range from $659,500 to $1,025,000 if Costa Vida provides you with all of the décor and furniture, as well as the initial inventories of mandatory branded clothing, uniforms, marketing materials, and similar items you need to open your Restaurant.
  • You must also pay all costs related to travel and accommodations for the mandatory introductory training for your Owners, Operating Partner, General Manager, and Preparation Cook. The cost of the actual training is included in the Franchise Fee.

5.  Grand Opening Expenses:  $10,000

  • You must spend not less than $10,000 for advertising and promotion of the opening of the Restaurant (the “Grand Opening Expenses.”). Those expenses will be for materials and marketing services expenses—such as media costs—and will not include staffing, discount, or food costs.
  • Your Grand Opening Plan must be implemented 30 days before your Restaurant’s targeted opening date and for 60 days following the commencement of the Restaurant’s operation.
  • In its sole and absolute discretion, Costa Vida may require that you pay to it or to an account designated by it the amount of $10,000 any time after 90 days prior to your scheduled opening date for the purpose of ensuring and verifying the implementation of the Grand Opening Plan and the proper use and payment of the Grand Opening Expenses in accordance with its then-current policies and procedures.

6.  Royalty Fees:  6% of monthly Net Sales

  • Due Date:  Payable weekly.
  • Payment made by automatic withdrawal monthly (or as otherwise designated by Costa Vida, but not more frequently than weekly).

7.  National Marketing Fund (“NMF”):  up to 2% of Net Sales



  • Due Date:  NMF (if collected by Costa Vida) payable same as Royalty Fees.
  • Payment made by automatic withdrawal monthly (or as otherwise designated by Costa Vida, but not more frequently than weekly).

8.  Local Marketing Funds (“LMF”):  2% of Net Sales to be spent by franchisee on local advertising and promotion

  • Due Date:  LMF (if collected by Costa Vida) payable same as Royalty Fees.

9.  Marketing Administration Fee (“MAF”):  0.5% of Net Sales

  • Due Date:  MAF payable same as Royalty Fees.

10.  Proprietary Ingredients:  price is established periodically by designated and approved suppliers for each type of Proprietary Ingredient

  • Due Date:  As ordered.

11.  Licensed Ingredients:  price is established periodically by designated and approved suppliers for each type of Licensed Ingredient

  • Due Date:  As ordered.

12.  Other Food Products and Supplies:  varies

  • Due Date:  As ordered.
  • You may purchase other food products, paper supplies, and promotional material from approved suppliers and/or in accordance with Costa Vida’s standards and specifications.

13.  Quality Control Programs:  varies



  • Due Date:  Ongoing.
  • Must contribute pro-rata share of costs of any program implemented, such as Interactive Voice Response (“IVR”), Internet Surveys, Customer Satisfaction Measurement, “customer intercept,” Mystery Shopping, or other programs Costa Vida may implement.

14.  Late Payments:  $100 per delinquent payment

  • Due Date:  Immediately.

15.  Late Reporting Fee:  varies; as of the date of the 2017 FDD, $25 per report per day, but subject to change at Costa Vida’s discretion

  • Due Date:  When the report becomes delinquent.

16.  Interest Expenses:  will vary under circumstances

  • Due Date:  Immediately.

17.  Fee for Insufficient Funds in Bank Account:  reimburse bank charges, plus pay administration fee

  • Due Date:  Within 14 days’ notice from Costa Vida of the insufficient funds.
  • Applies to any insufficient fund payment made by electronic transfer or checks to Costa Vida or its Affiliates.

18.  Alternative Supplier Evaluations Approval Fee:  Costa Vida’s reasonable costs and expenses, which currently are expected to range between $2,500 and $7,500, although cost could greatly exceed those amounts depending on the product and the proposed alternative supplier

  • Due Date:  Upon receipt of Costa Vida’s bill.
  • Cost Vida may impose reasonable inspections and supervision fees to cover its cost in evaluating and maintaining alternative brands or suppliers you propose in accordance with the Franchise Agreement.

19.  Audit:  cost of audit, plus interest at 1.5% month or the highest legal rate on any underpayment

  • Due Date:  15 days after receipt of audit or inspection report

20.  Site Selection Costs:  Costa Vida’s reasonable expenses, which are expected to range between $500 and $2,000

  • Due Date:  As incurred.
  • Must reimburse Costa Vida for its reasonable expenses, including the costs of travel, meals, and lodging incurred in site evaluation for each visit after the initial visit.
  • The expenses associated with site evaluation will not be refundable and will vary depending on various actors.

21.  Lease Review Fee:  varies

  • Due Date:  As incurred (if collected by Costa Vida).
  • Costa Vida may impose this fee for payment in an amount equal to the market rate for similar services.

22.  Information Systems Administration Fee (“ISAF”):  up to 0.25% of Net Sales

  • Due Date:  ISAF (if collected by Costa Vida), payable same as Royalty Fees.
  • Payment made by automatic withdrawal monthly (or as otherwise designated by Costa Vida, but not more frequently than weekly).

23.  Travel and Accommodation Expenses and Training Materials Fee for the Mandatory Introductory Training:  will vary

  • Due Date:  As incurred.
  • The cost for the mandatory introductory training is included in the Franchise Fee but franchisee must pay the attendant expenses.

24.  Additional Training or Assistance and Refresher Training:  will vary under circumstances

  • Due Date:  As incurred.

25.  Interim Management Fees:  10% of Net Sales

  • Due Date:  As incurred, at the end of each management period month.

26.  Insurance:  amounts imposed by insurance companies

  • Due Date:  As incurred.

27.  Maintenance Costs:  will vary under circumstances

  • Due Date:  As incurred.

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

  • Due Date:  As incurred.

29.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.

30.  Transfer Fee:  greater of $10,000 per Restaurant transferred or the Transfer Fee stated in Costa Vida’s then-current Franchise Agreement. This is in addition to any other agreements with Costa Vida or its Affiliates and payment of all of its costs associated with the transfer.

  • Due Date:  Upon sale or transfer.
  • Except in the case of a transfer to a corporation formed solely for the convenience of ownership, you must pay Costa Vida a Transfer Fee.

31.  Renewal Fee:  greater of $7,500 or then-current Franchise Fee less the amount paid to Costa Vida as an Initial Franchise Fee

  • Due Date:  30 days before expiration of the original franchise term, concurrent with the signing of a new Franchise Agreement.
  • Renewal Fee is for an additional franchise term at the same site under a new Franchise Agreement.

32.  Relocation Fee:  $5,000 or more

  • Due Date:  Payable before relocation.

33.  Standard POS Hardware, Software, Support, and System Training:  will vary under circumstances

  • Due Date:  As incurred.

34.  Operations Manuals Duplicate:  $300

  • Due Date:  Upon receipt of duplicate copy.

35.  Digital Menu System:  $75

  • Due Date:  Monthly.
  • A digital menu system is being implemented for all Costa Vida locations.

36.  Music Subscription:  $39

  • Due Date:  Monthly.
  • Customized Costa Vida music to be played in all Restaurants.

37.  Centralized Data System:  $50 to $150

  • Due Date:  Monthly.

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