If you are considering a Salsarita’s Fresh Mexican Grill franchise, don’t get blindsided by these 25 important franchise fees (from the initial franchise fee, to the royalty fee, to 23 other fees found in Items 5 and 6 of Salsarita’s Fresh Mexican Grill 2017 FDD).
1. Initial Franchise Fee: $30,000
- When you sign a Franchise Agreement, you must pay an initial franchise fee of $30,000 (“Initial Franchise Fee”).
- The Initial Franchise Fee under the Franchise Agreement will be $30,000, whether it is paid for a single Restaurant or as part of a Development Agreement. However, if you have paid Salsarita’s an Area Development Fee under a Development Agreement, and the Franchise Agreement is for the Restaurant to be developed under the Development Agreement, then you will receive a credit toward your Initial Franchise Fee, as described below.
2. Area Development Fee: $10,000 times the number of Restaurants to be developed
- If Salsarita’s offers you the opportunity to develop a minimum number of Restaurants under the Development Agreement, you and Salsarita’s will determine the number of Restaurants you must develop, and the dates by which you must develop them, before signing the Development Agreement.
- When you sign a Development Agreement, you must pay Salsarita’s an area development fee equal to $10,000 times the number of Restaurants to be developed under the Development Agreement (“Area Development Fee”), sign the Franchise Agreement for your first Restaurant to be developed, and pay Salsarita’s the Initial Franchise Fee for your first Restaurant.
- Then, for each Restaurant to be developed other than your first Restaurant, you will sign a Franchise Agreement and pay Salsarita’s an Initial Franchisee Fee either at the time you sign a lease or similar binding commitment to real estate for the Restaurant location or receive Salsarita’s approval of the architectural plans for the location, whichever event occurs earlier.
- For each Restaurant to be opened under the Development Agreement, $10,000 will be credited towards the Initial Franchise Fee.
3. Other Fees: varies
- Salsarita’s may provide one on-site evaluation, not to last more than two days, at no cost to you. However, if it provides additional on-site evaluations, you must reimburse it for all reasonable costs and expenses that it incurs, including travel, lodging, and meal expenses.
- You must also pay Salsarita’s a fee of $500 per day for each Salsarita’s employee or agent performing the additional evaluation services.
4. Royalty Fee: 3% to 6% of Net Revenues
- Due Date: As specified in the Manuals; the Royalty Fee is currently due weekly on Wednesday of each week.
- Payable under Franchise Agreement only.
5. Advertising Contributions: up to 6% of Net Revenues. Currently 2.5% of Net Revenues as follows: Creative Fund – currently 1% of Net Revenues; National Ad Fund – currently 0% of Net Revenues; Regional Co-op – amount determined by the Regional Co-op or Franchisor; Local Store Marketing – currently 1.5% of Net Revenues
- Due Date: As specified in the Manuals; currently, paid at the same time as the Royalty Fee.
- Payable under Franchise Agreement only. Divided among Creative Fund, National Ad Fund, Regional Co-ops, and Local Store Marketing.
- Salsarita’s has the right to establish a National Ad Fund.
- Salsarita’s has the right to establish a regional advertising cooperative in the area in which your Restaurant is located.
- At Salsarita’s request, you must pay it the required amount and it will reimburse you for approved expenditures up to the amount it collected from you.
6. Late Payment Fee: $100 per incident, plus 1 1/2% interest per month or maximum allowed by law
- Due Date: When payment is overdue.
7. Additional Training Fees: a reasonable fee per person per day for any additional person who receives initial training; a reasonable fee for additional training beyond initial training; $250 per person per day for new manager training, subject to adjustment
- Due Date: On demand.
- Payable under Franchise Agreement only.
- Salsarita’s provides initial training for three persons for approximately 27 days as part of the Franchise Fee.
8. Consulting Fees: subject to adjustment, $500 per day per person providing assistance, plus costs and expenses
- Due Date: On demand.
- Payable only if you request additional consulting services and services are rendered on your Franchise’s premises.
9. Renewal Fee (Franchise Agreement): the higher of 30% of (a) then-current Initial Franchise Fee or (b) the Initial Franchise Fee you originally paid
- Due Date: On signing new Franchise Agreement.
10. Transfer Fee (Franchise Agreement): 30% of then-current Initial Franchise Fee if the transfer is to an existing franchisee or an entity controlled by equity owners of an existing franchisee, or 100% of then-current Initial Franchise Fee if the transfer is not to an existing franchisee or an entity controlled by equity owners of an existing franchisee
- Due Date: Before transfer is effective.
11. Transfer Fee (Area Development Agreement): up to $10,000 for each Restaurant to be developed
- Due Date: Before transfer is effective.
- This is in addition to any transfer fees under any existing Franchise Agreements.
12. Attorneys’ Fees and Costs: actual fees and costs
- Due Date: After adjudication of legal matter or your failure to comply with the Agreement.
13. Supplier Approval: a fee not to exceed the reasonable cost of inspection and actual cost of testing
- Due Date: On demand.
14. Accounting Fees: a reasonable fee
- Due Date: On demand.
15. Audit Costs: actual costs of audit, plus interest on overdue amount
- Due Date: On demand.
16. Relocation Fee (Franchise Agreement): $7,500
- Due Date: At time a relocation request is made.
17. Liquidated Damages: will vary by circumstance
- Due Date: On demand.
18. Indemnification: amount of Salsarita’s fines, losses, damages, costs, and expenses
- Due Date: On demand.
19. Guest Satisfaction Programs: if implemented, all costs associated with guest satisfaction programs
- Due Date: On demand.
- If implemented, you must participate in programs initiated to verify customer satisfaction and operational compliance.
20. Non-Cash Payment Systems/Loyalty Program: any and all costs associated with non-cash payment systems or loyalty program that Salsarita’s may incur in connection with the Restaurant
- Due Date: As incurred.
- You must participate in Salsarita’s loyalty program. You also must accept debit cards, credit cards, stored value gift cards, or other non-cash payment systems, specified by Salsarita’s to enable customers to purchase authorized products at the Restaurant.
21. Point-of-Sale Software Subscription: currently estimated to be $300 per month
- Due Date: Monthly.
- You must purchase and use the software subscription that Salsarita’s designates to operate your point-of-sale system.
22. PCI Compliance Service Fees: currently, $65 per month
- Due Date: Monthly.
- You must use the vendor Salsarita’s designates to assist you with PCI compliant operations and transactions.
23. Anti-Virus Software Subscription: estimated to be between $120 and $150 per year
- Due Date: As incurred.
- You are required to maintain anti-virus software for your computer system.
24. Local Advertising Customization: a reasonable fee to cover the cost of preparation
- Due Date: As incurred.
- If you request that Salsarita’s assists you in preparing local advertising material, it may charge you a reasonable fee for the work.
25. Insurance Deficiency: cost of procuring insurance, plus 10% of the premium
- Due Date: On demand.
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