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Considering a Marco’s Pizza Franchise? Don’t Overlook These 33 Important Franchise Fees

by Franchise Chatter on November 11, 2017

in Franchise Fees, Pizza Franchises



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Marco's Pizza Interior Photo

If you are considering a Marco’s Pizza franchise, don’t get blindsided by these 33 important franchise fees (from the initial franchise fee, to the royalty fee, to 31 other fees found in Items 5 and 6 of Marco’s Pizza’s 2017 FDD).

1.  Initial Franchise Fee – Single Store Franchise Agreement:  $0 to $25,000



  • The Initial Franchise Fee for Limited Seating and Expanded Seating Stores is $25,000, but may be discounted if you qualify for Marco’s Pizza’s Military or Management Employee promotional incentives described below:
  • Marco’s Pizza currently discounts the Initial Franchise Fee to $20,000 for qualified fire fighters and law enforcement officers with 5 years of service or greater.
  • Marco’s Pizza currently discounts the Initial Franchise Fee to $15,000 for qualified U.S. veterans.
  • Marco’s Pizza currently waives the Initial Franchise Fee for qualified U.S. veterans with a 50% or greater military service-connected disability rating.
  • Marco’s Pizza currently discounts the Initial Franchise Fee for qualified “Key Management Employees.” A Key Management Employee is an individual who has been employed in a designated Store management program for a minimum of one year, either for Marco’s Pizza or for one of its franchisees.
  • There are three levels of available discounts: Level 1 (Director position or above for at least 1 year or 5 years of employment in all other positions, Initial Franchise Fee is 60% of the standard Initial Franchise Fee); Level 2 (Director position or above for at least 5 years or 10 years of employment in all other positions, Initial Franchise Fee is $10,000), and Level 3 (20 years of employment, any position, Initial Franchise Fee is $5,000).

2.  Development Fee:  $5,000 for each Store (minimum of two) that you must develop in your territory

  • If you sign a Development Agreement, you will pay Marco’s Pizza a Development Fee to acquire the rights under that Agreement. This amount will be equal to $5,000 for each Store (minimum of two) that you must develop in your territory.
  • Marco’s Pizza will apply a $5,000 credit from the Development Fee that you pay toward the Initial Franchise Fee that is due under the Franchise Agreement for each Store that you commit to develop under the Development Agreement.

3.   Exploration Deposit Fee:  $5,000

  • Under certain circumstances, if you want more detailed information about site analysis and Store operations prior to signing a Franchise Agreement, Marco’s Pizza may offer you the opportunity to enter into a Site Exploration Deposit Agreement and pay a $5,000 non-refundable deposit (“Site Exploration Deposit”) towards the Initial Franchise Fee.
  • Within 60 days after signing the Site Exploration Deposit Agreement, you will either sign a Franchise Agreement and pay Marco’s Pizza the remaining balance of the Initial Franchise Fee, or the Site Exploration Deposit Agreement will expire, Marco’s Pizza will retain the Site Exploration Deposit for the services provided under the Agreement, and no further action will be taken toward signing a Franchise Agreement.

4.  Brand Launch Program:  $30,000

  • Marco’s Pizza and you will work together to conduct a Brand Launch Program for your Store, which Marco’s Pizza estimates will cost $30,000.

5.  Royalty – Limited Seating and Expanded Seating Stores:  5.5% (subject to adjustment up to a maximum of 6.0%) of Net Royalty Sales

  • Due Date:  Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.

6.  Royalty – Special Venue Stores:  standard is 5.5% of Net Royalty Sales but may be reduced by agreement based on the Special Venue facility characteristics and event criteria

  • Due Date:  Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.

7.  Royalty – Key Management Employee Program:  2.5% of Net Royalty Sales after taking into consideration any commissions due to an Area Representative



  • Due Date:  Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.

8.  Brand Development Fund:  currently, 1% of Net Royalty Sales (Marco’s Pizza has the right to increase this fee by ½% by giving you 90 days’ prior written notice). Depending on the venue, Special Venue Stores may not be required to participate in the Brand Development Fund.

  • Due Date:  Same as Royalty Fee.
  • Used to fund creative content of advertising materials, brand development, web pages, franchise conferences, consumer research, motivational or leadership programs, and other activities that enhance the Brand.

9.  Geography Based Advertising Funds (includes National Advertising Fund and Regional Advertising Fund):  currently, Marco’s Pizza does not require contribution to a National Advertising Fund. The amount of contribution required to a Regional Advertising Fund depends on the geographic region in which the Store is located. Your total combined contribution to a National Advertising Fund and Regional Advertising Fund will not exceed a total of 5% of Net Royalty Sales combined for all levels of the Geography Based Advertising Funds.

  • Due Date:  Same as Royalty Fee.

10.  Market Advertising Cooperative:  amount set and spend determined by co-op member votes

  • Due Date:  Same as Royalty Fee.
  • Marco’s Pizza franchisees may form an advertising cooperative, which will establish its own local advertising fees to combine the resources of several Stores and manage advertising media purchases.
  • Marco’s Pizza allows credit for your Marketing Advertising Cooperative expenditure for a minimum of 3% against this Geography Based contribution.

11.  Local Store Marketing:  minimum of 0.5% of Net Royalty Sales, but not more than 7% minus the percentage contributed to the Brand Development Fund and Geography Based Advertising Funds

  • Due Date:  Same as Royalty Fee.
  • Paid to various vendors other than Marco’s Pizza.
  • Amount paid to an Ad Co-op may be credited toward your Local Store Marketing requirement.

12.  Additional Training:  $1,000 per person

  • Due Date:  2 weeks before beginning of training.
  • The Initial Franchise Fee includes initial training for one person (Designated Franchise Representative); for others, you must pay an additional fee.

13.  Replacement Designated Franchise Representative Training:  $5,000 per person



  • Due Date:  Upon beginning of training.
  • If Marco’s Pizza trains a replacement for you or the Designated Franchise Representative, the replacement must begin the initial training program within 15 days after the end of the former person’s full time employment.

14.  Additional Assistance:  $300 per day

  • Due Date:  30 days after billing.

15.  Performance Deficiencies Service Fee:  $500 per continued failure to comply with operational standards or policies

  • Due Date:  15 days after billing.
  • Payable if you fail to adequately achieve a performance measurement on a Store Visitation Report and fail to rectify the item before the next Store Visitation, but not less than 30 days.

16.  Financial Reporting Fee:  $100 per violation if financial reports are not submitted

  • Due Date:  30 days after due date.
  • Payable if you fail to submit financial reports each Accounting Period.

17.  Employee Solicitation Fee:  Team Member – $5,000; Store Manager – $10,000; GM – $25,000: Above Store Leader – $50,000

  • Due Date:  Upon Demand.
  • You are required to obtain a release from the employer of any current Marco’s Pizza team member prior to offering them employment. Failure to do so may result in a charge to you for reimbursement of the cost of training for the employee as scheduled in the Manual.

18.  Transfer:  $2,500 to $8,250, or 1/3 of the then-current Initial Franchise Fee plus 3% of gross selling price if buyer is acquired through Marco’s Pizza’s lead generation system or existing franchisee

  • Due Date:  Before the transfer takes place.
  • Payable when you sell your franchise. No charge if franchise transferred to a corporation, partnership, or limited liability company which you control.

19.  Audit:  cost of audit, plus prime, plus 4% interest on underpayment

  • Due Date:  15 days after billing.
  • Payable only if audit shows an understatement of at least 2% of Net Royalty Sales for any Accounting Period.

20.  Renewal Fee – Limited Seating and Expanded Seating Stores:  $6,250, or 25% of the then-current Initial Franchise Fee, whichever is greater

  • Due Date:  30 days before renewal

21.  Renewal Fee – Special Venue Store:  25% of the then-current Initial Franchise Fee, but may be reduced by agreement based on the various Special Venue facilities, characteristics, and event criteria

  • Due Date:  30 days before renewal.

22.  Insurance:  varies

  • Due Date:  As incurred.
  • If you fail to obtain the required insurance coverage(s), Marco’s Pizza may obtain this insurance for you and you must reimburse it within 5 days for all costs it incurs in doing so.

23.  Interest and Additional Expense Fees:  1.5% per month interest on all late payments, plus a 5% Additional Expense Fee

  • Due Date:  As accrued.
  • These fees apply to late payments owed to Marco’s Pizza or its affiliates.
  • The Additional Expense Fee applies to amounts due that are not paid within 10 business days of the due date.

24.  Termination Fee:  Average Royalty Fees due for the 24 full Accounting Periods immediately preceding the time you ceased operation times the lesser of: (a) 36; and (b) the number of Accounting Periods remaining in the Term of the Franchise Agreement

  • Due Date:  Upon franchisee termination.
  • Marco’s Pizza will not enforce the requirement to pay a termination fee if you and it mutually agree to close the Store, sell the equipment, sign a termination agreement, and if a pizza store no longer operates at the location.
  • You may terminate the Franchise Agreement at any time after finishing the initial training program by giving Marco’s Pizza written notice at least 120 days before termination and paying it the Termination Fee at least 30 days before termination.

25.  On-line Order Entry System Pyrimont:  currently, the maximum charged is $145 per month

  • Due Date:  Paid to Pyrimont Operating Solutions as accrued.
  • You may only purchase on-line services from Pyrimont or FoodTec – depending on which POS system you choose.

26.  On-line Order Entry System FoodTec Solutions (bundled fee for POS system, online ordering, and other POS system features):  currently $199 per month

  • Due Date:  Paid to FoodTec Solutions as accrued.
  • You may only purchase on-line services from Pyrimont or FoodTec – depending on which POS system you choose.

27.  Web-Based Training (Marco’s University):  payment included as part of the Technology Fee

  • Due Date:  Weekly – Same as Royalty Fee.
  • Ongoing fees will be deposited into a separate web-based training fund and will be used to purchase future enhancements of the program.

28.  Technology Fee:  $110.54 per Accounting Period by ACH

  • Due Date:  $27.64 Weekly – Same as Royalty Fee.
  • Multiple technology systems to provide support for customer relationship management system, email advertising customers, online training, and tools to measure customer satisfaction.

29.  Costs and Attorneys’ Fees:  will vary under circumstances

  • Due Date:  Upon demand.
  • If you default under the Franchise Agreement, you must reimburse Marco’s Pizza for its expenses (including reasonable attorneys’ fees) in enforcing or terminating the Agreement.

30.  Audit Costs:  all costs and expenses associated with the audit, reasonable accounting and legal costs, and interest on the underpayment

  • Due Date:  Upon demand.
  • Payable only if Marco’s Pizza audits because you did not submit sales statements or keep books and records, or if you underreport your sales by 2% or more, or intentionally underreport.

31.  Indemnification:  will vary under circumstances

  • Due Date:  As incurred.

32.  Securities Offering Fee:  $2,500 or Marco’s Pizza’s actual expenses, whichever is greater

  • Due Date:  Upon demand.
  • If you engage in a securities offering, you must reimburse Marco’s Pizza for its reasonable costs and expenses (including legal and accounting fees) to evaluate your proposed offering and you also must indemnify Marco’s Pizza.

33.  Development Agreement Continuation Fee:  75% of the weekly average systemwide sales, multiplied by 5.5%

  • Due Date:  Weekly.
  • If you do not meet your Development Schedule obligations under the Development Agreement, you may extend the relevant time period for up to 6 months by paying a Continuation Fee.

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