If you are considering a Sylvan Learning franchise, don’t get blindsided by these 11 important franchise fees (from the initial franchise fee, to the royalty fee, to 9 other fees found in Items 5 and 6 of Sylvan Learning’s 2017 FDD).
1. Initial Franchise Fee: $26,800
- The combined initial franchise fee for the Sylvan System and the SylvanSync System under the License Agreement, including the required initial purchases from Sylvan, is $26,800 and is payable in three parts.
- Application Fee ($5,000) – When you sign an Application for a Sylvan and SylvanSync license. The Application Fee is credited toward your initial license fee if you receive a license. If you do not receive a license, Sylvan Learning will refund the Application Fee to you.
- Balance of Initial License Fee ($19,000) – When you sign the Sylvan and SylvanSync License Agreement and SylvanSync Beta 3 Agreement. If Sylvan Learning does not approve the proposed location that you submit to it, it may cancel the License Agreement and refund the initial license fee less an amount of up to $2,500, which Sylvan Learning may retain as compensation for its reasonable expenses. Sylvan Learning does not refund the initial license fee under any other circumstances.
- Required Initial Purchase of Sylvan Learning Materials ($2,800) – After you sign the Sylvan License Agreement, and before you begin operating. Fifty percent must be paid in advance of shipping as a deposit. The Sylvan Learning Materials are certain education programs, programs and student record forms, parent information booklets, business operations materials and equipment, and explanatory and promotional brochures developed or copyrighted by the franchisor or its predecessors, which you are required to purchase from Sylvan Learning.
- If you choose to participate in the optional Sylvan EDGE Program, you must pay an initial license fee of $10,000 at the time you sign the Sylvan EDGE Package Agreement.
- If you choose to participate in the optional Ace it! Program, you must pay an initial license fee of $5,000 at the time you sign the Ace it! Tutoring System Agreement.
- If you sign the Sylvan EDGE Package Agreement and the Ace it! Tutoring System Agreement concurrently with the License Agreement, the aggregate amount of the initial license fees will be reduced from $39,000 to $30,000.
- You may open additional Centers within the Territory if you pay Sylvan Learning a fee of $1,000 to compensate it for its expenses incurred in site review and plan approval.
2. Royalty: 16% of monthly gross revenues, with a total Minimum Annual Royalty of not less than $32,000
- Due Date: Payable by the 15th day of each month.
- A portion of the royalty may be directed by Sylvan Learning to Sylvan Advertising.
- For each calendar year, your monthly royalties paid to Sylvan Learning must total at least the Minimum Annual Royalty.
3. Territory Advertising Minimum for Local Advertising and Co-op Expenditures: 8% of monthly gross revenues, capped at a maximum of $40,000 per Territory per calendar year
- Due Date: Payment liability accrues monthly, up to the cap.
- Paid to third-party vendors you select and/or your co-op.
- Local advertising expenditures are always required, and you will incur them either through advertising activities you undertake directly and/or through a local or regional advertising co-op.
- Sylvan Learning can request that you contribute 100% of your required local advertising expenditure to an advertising co-op.
4. Audit: cost of audit, plus late fee on deficiency
- This charge applies only if the audit discloses that you failed to pay 3% or more of the fees actually due to Sylvan Learning during the period covered by the audit.
5. Transfer Fee: $6,000; $3,000 in case of transfer to existing Sylvan Learning licensee
- Due Date: Before transfer.
- You or the transferee must pay the transfer fee.
- One half of the transfer fee is due to Sylvan Learning at the time you submit your transfer request and is not refundable. The other half is due at the time the transfer closes.
- There is no charge if you transfer your franchise to a corporation that you wholly control.
- Non-refundable, except in the event that the proposed transfer does not close, in which case the second half of the fee is abated.
6. Renewal Fee: 10% of the initial license fee set forth in Sylvan’s then-current form of License Agreement
- Due Date: Before renewal.
7. Additional Center Administrative Fee: $1,000
8. Territory Addition Fee: $10,000 for Territory addition, plus incremental fee of $2 per school-age child over 5,000
9. Territory Split Fee: $5,000 for Territory Splits
10. Resale Assistance Program: up to 5% of the purchase price, and may include a $500 fee payable upon enrollment
- Due Date: Before transfer.
- Voluntary program that licensee can use to obtain assistance with transferring/selling their franchise.
- Fee is subject to change.
11. Liquidated Damages for Breach: average monthly royalty over preceding 36 months
- Applies to the period from breach until injunction issues for breach of paragraphs 3, 12.1, or 12.5 of the License Agreement.