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Considering a School of Rock Franchise? Don’t Overlook These 19 Important Franchise Fees

by Franchise Chatter on October 21, 2017

in Child-Related Franchises, Franchise Fees, Music Education Franchise



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

If you are considering a School of Rock franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of School of Rock’s 2017 FDD).

1.  Initial Franchise Fee:  $49,500



  • You must pay to School of Rock a $49,500 lump sum, non-refundable initial franchise fee for a single School of Rock franchise to be operated under an individual Franchise Agreement. You must pay the entire initial franchise fee no later than the date of your signing the Franchise Agreement.

2.  Development Fee:  $9,900 for each school you are granted the right to open under the Development
Agreement

  • If you enter into a Development Agreement, you must pay to School of Rock a lump sum, non-refundable development fee equal to $9,900 for each School you are granted the right to open under the Development Agreement. You must pay the entire development fee no later than the date of your signing the Development Agreement.
  • The development fee will be credited towards the initial franchise fee due under each Franchise Agreement you sign on a pro rata basis. The development fee is deemed fully earned and non-refundable when you sign the Development Agreement in consideration of the administrative and other expenses incurred by School of Rock and for the development opportunities lost or deferred as a result of the development rights granted to you.
  • School of Rock generally does not offer Development Agreements to first time franchisees. If you enter into a Development Agreement and you already have a School of Rock franchise, the initial franchise fee due under each subsequent Franchise Agreement is $24,750.

3.  Change in Opening Date:  varies

  • You must provide School of Rock at least 30 days’ notice of the date on which you propose to first open the School. If there is a change in the opening date, not caused by School of Rock, you must reimburse it for the greater of (a) its actual out-of-pocket costs and expenses incurred by it due to this delay, including travel costs and expenses for its representative(s), or (b) $300 for each additional day that its representative(s) is in your area beyond the scheduled visit as a result of delay in opening the School. These fees are non-refundable.

4.  Little Wing Teacher Kit:  $4,500

  • If you have elected to operate a Little Wing™ Program, you must purchase a Little Wing™ teacher kit (“Teacher Kit”), Little Wing™ marketing materials, and an inventory of Little Wing™ student gig bags (“Gig Bags”) from School of Rock through its designated vendor. School of Rock estimates the total cost of these items to be $4,500. The cost of these items is non-refundable.

5.  School of Rock Branded Merchandise:  varies

  • You may also purchase School of Rock branded merchandise from School of Rock before the School opens, but you are not required to have an opening inventory of these products. If you choose to purchase branded merchandise from School of Rock, the cost of that merchandise is non-refundable.

6.  Royalty:  8% of Gross Sales

  • Due Date:  10th day of each month.
  • “Gross Sales” means all revenues generated from sales of all products and services conducted at, from, or with respect to the School, including Live Performances and Professional Performances that are performed, organized, sponsored, hosted, or supported by you at the School or elsewhere, whether the sales are evidenced by cash, check, credit, charge, account, barter, or exchange.
  • Gross Sales does not include the sale of products or services for which refunds have been made in good faith to customers, the sale of equipment or furnishings used in the operation of the School, any sales taxes or other taxes collected from customers by you and paid directly to the appropriate taxing authority.
  • Gross Sales also include any insurance proceeds you receive for loss of business due to a casualty to or similar event at the School.

7.  Brand Fund:  3% of Gross Sales



  • Due Date:  10th day of each month.
  • You must pay to the System’s advertising and brand promotion fund (the “Brand Fund”) a monthly fee in the amount of 3% of your Gross Sales for the preceding month.

8.  Interest:  interest on overdue payments

  • Due Date:  As incurred.
  • All required royalty fees and advertising contributions must be paid by the 10th day of each month based on your Gross Sales in the preceding month, and must be submitted to School of Rock together with any reports or statements required by the Franchise Agreement.
  • If any payment is overdue, you must pay School of Rock immediately upon demand, in addition to the overdue amount, interest on this amount from the date it was due until paid, at the rate of 18% per annum, or the maximum rate permitted by law, whichever is less.

9.  Insurance:  cost of insurance and, if not obtained by you, School of Rock’s procurement expense

  • Due Date:  As required and as incurred.
  • Before you open your School, you must purchase and maintain at your sole expense at all times during the term of the Franchise Agreement the insurance coverage required by the Franchise Agreement, including comprehensive general liability insurance, property insurance (including fire, vandalism, and malicious mischief insurance for the replacement value of the School and its contents), casualty insurance, business interruption insurance, statutory workers’ compensation insurance, employer’s liability insurance, product liability insurance, and automobile insurance coverage for all vehicles used in connection with the operation of the School.
  • If you fail to obtain or maintain the insurance required, School of Rock will have the right and authority (but not the obligation) to procure and maintain the required insurance in your name and to charge you for it, which charges, together with a reasonable fee for its expenses in so acting, will be payable by you immediately upon notice.

10.  Inspection/Audit:  cost of audit

  • Due Date:  As incurred.
  • School of Rock and its designated agents have the right at all reasonable times to examine, copy, and/or personally review, at its expense, your books, records, accounts, and tax returns. It has the right at all reasonable times to remove your books, records, accounts, and tax returns for copying. It also has the right, at any time, to have an independent audit made of your books and records.
  • If an inspection or audit reveals that any income or sales have not been reported or have been understated in any report to School of Rock, then you must pay School of Rock the amount underpaid immediately upon demand, in addition to interest from the date the amount was due until paid, at the rate of 18% per annum, or the maximum rate permitted by law, whichever is less, plus all of School of Rock’s costs and expenses in connection with the inspection or audit, including travel costs, lodging and wage expenses, and reasonable accounting and legal fees and costs.

11.  Training Fee:  $1,000

  • Due Date:  As incurred.
  • For the Initial Training Program, School of Rock will provide instructors and training materials at no charge to you for up to 4 individuals. You must pay School of Rock a training fee of $1,000 for each additional individual that attends the Initial Training Program.

12.  Site Selection (including on-site evaluation):  amount of expenses

  • Due Date:  As incurred.
  • Under the Franchise Agreement and Development Agreement, School of Rock will conduct, if it deems necessary and appropriate, on-site evaluations of a properly submitted proposed site. For each on-site evaluation (if any), you must reimburse School of Rock for all of its reasonable out-of-pocket costs and expenses.

13.  Transfer:  one-third of the then-current initial franchise fee



  • Due Date:  Time of transfer.
  • If there is a transfer under the Franchise Agreement or Development Agreement, you must pay to School of Rock a transfer fee in an amount equal to one-third of its then-current initial franchise fee being charged to franchisees at the time of the transfer.
  • However, in the case of a transfer to a corporation or limited liability company formed by you for the convenience of ownership, you will not have to pay a transfer fee.

14.  Renewal:  one-third of the then-current initial franchise fee

  • Due Date:  Time of renewal.
  • If you renew your rights under the Franchise Agreement, you must pay to School of Rock a renewal fee in an amount equal to one-third of its then-current initial franchise fee being charged to franchisees at the time of the renewal.

15.  Indemnification:  cost of liability

  • Due Date:  As incurred.
  • Under the Franchise Agreement and Development Agreement, you must indemnify and hold School of Rock, and its officers, directors, and employees harmless against any and all claims, losses, costs, expenses, liabilities, and damages arising directly or indirectly to School of Rock, as a result of, or in connection with, your operation of the School, as well as the costs, including attorneys’ fees, of the indemnified party in defending against them.

16.  Collection Costs and Attorneys’ Fees:  cost of collection and attorneys’ fees

  • Due Date:  As incurred.
  • Under the Franchise Agreement, you must pay to School of Rock all damages, costs, and expenses, including all court costs, arbitration costs, and reasonable attorneys’ fees, and all other expenses it incurs in enforcing any obligation or in defending against any claim, demand, action, or proceeding relating to the Franchise Agreement or Development Agreement, including the obtaining of injunctive relief.

17.  Information Technology Fees:  fixed and variable

  • Due Date:  Monthly.
  • You will pay School of Rock a monthly technology fee to cover website hosting, e-mail licenses, and certain other technology resources. Currently, the amount of this fee is $260 per month, but the fee may be increased depending on bandwidth or functionality changes in School of Rock’s website, the number of e-mail licenses you require, and changes in School of Rock’s technology vendors or requirements.
  • You will also pay variable monthly fees to third-party providers as described in Item 11.

18.  Licensing Fees:  $61 currently

  • Due Date:  Monthly.
  • School of Rock has negotiated and is negotiating license agreements with copyright owners of certain copyrighted music used in the operations of the School and on the premises of the School.
  • You must pay School of Rock a monthly Licensing Fee in the amount set forth in the Manuals to cover the cost of these licenses for your School. Currently, the Licensing Fee is $61.
  • However, School of Rock reserves the right to increase or decrease the fee as the amount that it pays for the licenses changes, or as it negotiates additional licenses.

19.  Student Gig Bags:  $25 each

  • Due Date:  As needed.
  • You must purchase and maintain an inventory of student Gig Bags to provide to each child enrolled in your Little Wing™ Program if you have elected to offer the Little Wing Program. You will order these through the designated vendor that manages School of Rock’s inventory of these products.

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