Considering an Another Broken Egg Cafe Franchise? Don’t Overlook These 20 Important Franchise Fees

If you are considering an Another Broken Egg Cafe franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Another Broken Egg Cafe’s 2017 FDD).

1.  Initial Franchise Fee:  $35,000 to $50,000

• You must pay an initial franchise fee when you sign the Franchise Agreement. The initial franchise fee for your first Cafe is $50,000, and the initial franchise fee for each additional Cafe is $35,000.

• If you sign a Development Agreement for the establishment of two or more Cafes, you must sign a Franchise Agreement and pay the full $50,000 initial franchise fee for your first Cafe and you must pay $17,500 (50% of the $35,000 initial franchise fee) for each additional Cafe when you sign the Development Agreement.

• You must pay the remaining 50% of the initial franchise fee for each additional Cafe ($17,500) when you sign the Franchise Agreement for that Cafe.

• You must sign a Franchise Agreement for each additional Cafe within 20 days after receipt of written notice of Another Broken Egg Cafe’s approval of the site on which the Cafe will be developed and before your commencement of construction, occupancy, and/or operation of the Cafe.

• All franchise fees arc fully earned by Another Broken Egg Cafe on receipt and are not refundable under any circumstances.

2.  Royalty:  5% of Gross Sales

• Payable weekly on Friday by electronic funds transfer (if Friday is a national holiday, payment shall be due on the next business day).

• You must use Another Broken Egg Cafe’s designated software, which allows Another Broken Egg Cafe to receive revenue reports directly from your Point-of-Sale computer system.

• Lower royalty rates may be applicable to existing franchisees.

3.  Advertising:  currently, 1% of Gross Sales

• Due Date:  Payable weekly by electronic funds transfer at the same time as the Royalty.

• Another Broken Egg Cafe will administer a system-wide National Marketing Fund (the “NMF”).

• Lower advertising rates may be applicable to existing franchisees.

• Upon 90 days’ prior written notice to you, Another Broken Egg Cafe may increase the required NMF contribution percentage by up to 0.25% per calendar year, provided that the required contribution will not exceed 2% of Gross Sales.

4.  Regional Marketing Fee:  if applicable, up to 2% of Gross Sales

• Due Date:  Payable weekly by electronic funds transfer at the same time as the Royalty.

• If Another Broken Egg Cafe establishes a regional marketing fund in a region in which the Cafe is located, you will pay to it a regional marketing fee in an amount that it determines.

5.  Local Advertising:  minimum of 2% of your Gross Sales

• Due Date:  These advertising funds are to be self-administered by you.

• You must use these amounts on local advertising and promotion and provide Another Broken Egg Cafe with proof of such expenditures. Lower advertising rates may be applicable to existing franchisees.

6.  Grand Opening Advertising Campaign:  minimum of $5,000

• Due Date:  Between 15 days prior to opening and 30 days following opening.

• You must spend at least $5,000 on advertising, promotions, and/or publicity as Another Broken Egg Cafe approves in connection with the opening of the Cafe.

• You will pay this amount directly to approved third parties. Proof of such expenditures (in the form of cancelled checks, paid invoices, copies of advertisements, or otherwise) must be submitted to Another Broken Egg Cafe within 30 days following the opening.

7.  Training/Conferences and Conventions:  your food, lodging, travel, and other expenses. Additional training fee = minimum of $2,500 per person

• Due Date:  Before scheduled event.

• Initial training for up to four people is included in the initial franchise fee.

• For all training sessions, conferences, and conventions, you must pay all travel, lodging, meal, and other expenses for you and your attendees.

8.  Special Field Assistance:  currently $200 per person, per day, plus Another Broken Egg Cafe’s out-of-pocket expenses

• Due Date:  Before scheduled assistance. This fee is for special field assistance you specifically request.

9.  Late Fee:  $250

• Due Date:  When billed.

• You must pay a late fee for each past due payment in addition to the interest disclosed herein.

10.  Interest Charge on Late Payments:  all overdue amounts will bear interest until paid at the lesser of 1.5% per month or the highest rate of interest allowed by law

• Due Date:  When billed.

• Interest accrues from the original due date until payment is received in full. If no due date is stated, interest begins to accrue 30 days after billing.

11.  Software License Fee:  currently $300 per year

• Due Date:  When billed.

• You must use Another Broken Egg Cafe’s designated software and pay its software license fee.

12.  PlayerLync License:  $175

• Due Date:  When billed.

• You muse obtain a software license for the PlayerLync system used in your Cafe.

• Another Broken Egg Cafe provides the first software license to you at no cost, but additional licenses will cost $175 per year.

• Another Broken Egg Cafe recommends, but does not require, that you have at least two PlayerLync systems for each Cafe.

13.  Transfer Fee:  $10,000 if transferee is not a current Another Broken Egg Cafe franchisee or $4,500 if transferee is a current Another Broken Egg Cafe franchisee

• Due Date:  Before effective date of transfer of franchise or development grant.

• There is no fee charged if franchise or development grant is transferred to a legal entity that you control.

• All transfers must comply with the Franchise Agreements and transfer guidelines. In addition, the person to whom you transfer the franchised business (the “transferee”), if not then a current Another Broken Egg Cafe franchisee having at least one open and operating franchised business, and his manager, must complete any training programs then in effect for current franchisees.

• The transferee must pay for the expenses related to this training.

14.  Audit Fee:  expenses incurred by Another Broken Egg Cafe in performing audit

• Due Date:  When billed.

• Due only if the audit shows an understatement of 2% or more, or if the audit is made necessary by your failure to furnish required information or documents to Another Broken Egg Cafe in a timely manner and format.

15.  QSA Audit Fee:  expenses incurred by Another Broken Egg Cafe in performing QSA audit

• Due Date:  When billed.

• Due only if you are unable to provide Another Broken Egg Cafe with proof of compliance with required data security standards and Another Broken Egg Cafe engages a Qualified Security Assessor to conduct an audit.

16.  Insurance Coverage Reimbursement:  Another Broken Egg Cafe’s actual costs, interest on the advanced funds, and the administrative expenses

• Due Date:  When billed.

• If you fail to maintain the proper levels and types of insurance required by the Franchise Agreement, Another Broken Egg Cafe may obtain the required insurance and charge you the cost plus its interest and administrative expenses.

17.  Indemnification:  Another Broken Egg Cafe’s actual cost

• Due Date:  As incurred.

• If you do not satisfy your obligations under the Development/Franchise Agreement, Another Broken Egg Cafe may perform your obligations for you.

• You must reimburse Another Broken Egg Cafe for its costs in performing your obligations. You must reimburse Another Broken Egg Cafe if it is held liable for claims involving the operation of your business.

• Indemnification covers Another Broken Egg Cafe’s members, officers, employees, and agents.

18.  Replacement Fee for Manual:  $50 per volume

• Due Date:  When billed. Due only if the Manual is lost, stolen, damaged, etc.

19.  Renewal Fee:  $5,000

• Due Date:  Due upon signing, only if you would like to renew the Franchise Agreement.

• You must pay a non-refundable renewal fee upon the expiration of the initial term of the Franchise Agreement if you elect to renew the Franchise Agreement and Another Broken Egg Cafe agrees to renewal per the terms of the renewal provisions of the Franchise Agreement.

20.  Liquidated Damages:  5% of average Gross Sales from preceding 3 years multiplied by remaining years of Agreement and discounted to present value at 8%

• Due Date:  Within 5 business days of termination.

• If Another Broken Egg Cafe terminates your Franchise Agreement due to your default, you must pay it this liquidated damages amount.

• If your Cafe has not been open for 3 years, the average Gross Sales will be measured over the period that your Cafe has been open.