If you are considering a Proforma franchise, don’t get blindsided by these 14 important franchise fees (from the initial franchise fee, to the royalty fee, to 12 other fees found in Items 5 and 6 of Proforma’s 2018 FDD).
1. Initial Franchise Fee: $0 to $14,500
2. Customized Fast-Track Marketing Kit: $4,500
- If you meet Proforma’s qualifications as a Start-Up franchise owner, you must pay it an initial franchise fee of $14,500 and $4,500 for a customized Fast-Track Marketing Kit personally designed from Proforma’s proprietary marketing and business development tools and resources no later than the day before you begin Proforma’s initial training program.
- Proforma is a member of the International Franchise Association and participates in their VetFran Program, which provides special financial incentives to qualified veterans. In November 2012, Proforma began offering 100 franchise grants to qualifying honorably-discharged veterans of the United States Armed Forces (“U.S. Veterans”). The $14,500 initial franchise fee will be waived in its entirety for the first 100 qualifying honorably-discharged U.S. Veterans approved for a Proforma Start-Up franchise (“Veteran Franchise Grant Program”).
- Qualified veterans receiving a Start-Up franchise under the Veteran Franchise Grant Program will be required to invest $4,500 for the customized Fast-Track Marketing Kit.
- Proforma may modify or discontinue this Veteran Franchise Grant Program at any time. Upon expiration or termination of the Veteran Franchise Grant Program, qualifying U.S. Veterans will pay 50% of the initial franchise fee, or $7,250, as a Start-Up franchise owner.
- For those with relevant industry experience (defined below) or those who qualify as a conversion franchise (defined below), the initial franchise fee for a Proforma franchise is waived.
- Start-Up franchise owners may receive a 50% refund of their initial franchise fee if during the 12-month period after the Effective Date of the Franchise Agreement, Proforma has collected a sales amount of $150,000 or greater from their customers. This refund will not apply to the customized Fast-Track Marketing Kit fee. This refund will not apply to Start-Up franchise owners receiving the U.S. Veteran’s initial franchise fee waiver or discount described above.
- You have “Relevant Industry Experience” and your initial franchise fee for a Proforma Franchise will be waived if either:
- (a) in your role as a representative or employee of a company which primarily sold business forms, commercial printing, specialty advertising items, packaging, apparel, point-of-purchase displays, multi-media services, and related business supplies during the 12 consecutive months before you sign an Agreement, you can prove that you sold at least $120,000 of those products; or
- (b) you were in a full-time role as a sales representative, sales employee, or direct sales support employee of a company that primarily sold business forms, commercial printing, specialty advertising items, packaging, apparel, point-of-purchase displays, multi-media services, and related business supplies for at least three years within the previous five years; or
- (c) you can demonstrate relevant industry experience that is acceptable to Proforma in its own sole discretion.
- You are a “Conversion franchise owner” and your initial franchise fee for a Proforma Franchise will be waived if you have a controlling interest in an existing business that primarily sells business forms, commercial printing, specialty advertising items, packaging, apparel, point-of-purchase displays, multi-media services, and related business supplies that has been in operation for at least 12 consecutive months before signing an Agreement.
3. Service Fee: 5% to 9%
- Due Date: the earlier of (i) when collected from Customer, or (ii) 120 days from the customer invoice date.
- Proforma retains fees from amounts it collects for you.
4. Marketing Fund: 0.25% to 1%
- Due Date: The earlier of (i) when collected from Customer, or (ii) 120 days from the customer invoice date.
- Proforma retains fees from amounts it collects for you.
5. Proprietary Order Processing Software License Fee and Communication and Technology Support Fee: $100 per month
- Due Date: 25th of the month.
- The voice message box is accessed through an “800” line hook-up, voice mail, E-mail usage, and Proprietary Order Processing Software incremental support.
6. Supplier Rebates, Commissions, and Consideration: 100% of amount received
- Due Date: On receipt.
- You must pay to the Marketing Fund all allowances, payments, and other consideration you receive from suppliers or others for cooperative marketing, services, or warranties.
7. Insurance Costs: $300 to $1,000 per year
- Due Date: Prior to the commencement of your Franchised Business.
- Comprehensive general liability coverage for your Franchised Business. The insurance coverage must have a minimum of $1,000,000 general liability and list “PFG Ventures, L.P., 8800 East Pleasant Valley Road, Cleveland, OH 44131” as an additional insured.
- Also, workers’ compensation, Employer’s liability, content coverage, general casualty loss, and business interruption, if required, per Proforma’s standards in the Manual.
8. Interest on Late Payments: 15% per annum
- Due Date: 5 days after missing any payment.
- If 15% exceeds top lawful rate, Proforma will charge the highest rate permitted by law.
9. Payments to Third Parties: cost of products you order
- Due Date: 35-45 days after manufacturer’s invoice date.
- Proforma invoices your customers, pays your suppliers, including itself, with collections from customers, and remits the balance to you.
10. Supplemental Training Fee: cost of meals and additional training materials
- Due Date: 30 days after training.
- Cost of meals and additional training materials during the training week for each attendee.
11. Miscellaneous Fees – Direct Vendor Payment Charge: 10% of the vendor invoice amount or a minimum of $100
- Due Date: When payment is made.
- Due when you pay more than $500 directly to a vendor without Proforma’s prior approval.
12. Payment Conversion Fee: 3 times amount you collect
- Due Date: Upon Proforma’s demand.
- If you collect from a customer any payments which the Agreement requires to be paid directly to Proforma, and if you fail to immediately notify Proforma and forward the payment to it, you must pay Proforma triple the gross amount you collected.
13. Account Acquisition Fee: an amount equal to 24 times the average monthly service fee you owed Proforma during the 24 months before the Termination Date
- Due Date: After you notify Proforma and before termination is effective.
- Not applicable if you and your guarantors agree for 1 year to cease selling products and/or services (to your former customers) that are the same or similar to products and/or services Proforma offers, and if you sign a general release.
- If this is a Renewal Agreement, only those customers identified on your original Schedule 1 of your initial Franchise Agreement shall be included on the Renewal Agreement’s Schedule 1.
14. Business Charter Default Fee: $1,000
- Due Date: On demand.
- If within 30 days of the Effective Date of your Franchise Agreement, you fail to either form a business entity (corporation, partnership, or LLC) to own your franchise, or you allow its charter to terminate during any part of the year, you must pay Proforma this fee in any year during which your business charter is not effective.
- Proforma may also terminate your franchise.