Considering a Scooter’s Coffee Franchise? Don’t Overlook These 21 Important Franchise Fees

Updated September 27, 2019.

If you are considering a Scooter’s Coffee franchise, don’t get blindsided by these 21 important franchise fees (from the initial franchise fee, to the royalty fee, to 19 other fees found in Items 5 and 6 of Scooter’s Coffee’s 2019 FDD).

1.  Initial Franchise Fee:  $40,000

• Under the Franchise Agreement, you must pay Scooter’s Coffee a nonrefundable initial franchise fee of $40,000 for the first Franchise Agreement that you sign (“Initial Franchise Fee”), regardless of the type of Store you purchase. The Initial Franchise Fee is not refundable for any reason.

• You will pay Scooter’s Coffee its then-current Initial Franchise Fee if you sign any additional Franchise Agreements. It will, however, refund to you $15,000 of the Initial Franchise Fee you paid to it if:

• (i) you sign the Franchise Agreement and open the Store within 24 months of the opening of your most recently opened Store, and (ii) you are in compliance with any other agreements between you (or your affiliates) and Scooter’s Coffee (or its affiliates).

• You must sign Scooter’s Coffee’s then-current form of Franchise Agreement for each Store you operate, and you must pay Scooter’s Coffee its then-current Initial Franchise Fee in a lump sum when each Franchise Agreement is signed.

2.  Initial Grand Opening Support and Marketing Fee:  $10,000

• Under the Franchise Agreement, you must pay Scooter’s Coffee an initial grand opening support and marketing fee of $10,000 at the time the Franchise Agreement is signed (the “Initial Grand Opening Support and Marketing Fee”).

• Scooter’s Coffee (or an Area Representative) will match up to 50% of your Initial Grand Opening Support and Marketing Fee (for example, $5,000) if you satisfy Scooter’s Coffee’s Initial Grand Opening Support program requirements.

• Scooter’s Coffee will use some (or all) of the Initial Grand Opening Support and Marketing Fee to directly pay or reimburse you for qualified expenses related to your grand opening promotional advertising campaign. Scooter’s Coffee may also use the Initial Grand Opening Support and Marketing Fee to off-set the costs and expenses related to providing on-site opening assistance at your Store.

• The Initial Grand Opening Support and Marketing Fee is not refundable for any reason.

3.  Initial Inventory and Certain Equipment:  $64,500 to $79,000

• You must purchase your initial inventory and certain Store equipment from Scooter’s Coffee’s affiliate, Harvest Roasting (and other preferred vendors), before opening your Store.

• Scooter’s Coffee estimates that the range of the costs of your opening inventory (including menu items, ingredients, paper goods, uniforms, and branded products and merchandise for retail sale) and certain Store equipment (including espresso machine, countertops, storage, coffee brewers, coffee grinders, smoothie machines, oven, refrigerators, ice makers, sinks, shelving, menu board) will be $64,500 to $79,000.

• The amount paid for your opening inventory and equipment is not refundable for any reason.

• Scooter’s Coffee is a member of the International Franchise Association (“IFA”), and supports and participates in IFA’s VetFran Program. If you are an honorably discharged veteran who meets Scooter’s Coffee’s qualifications for new Scooter’s Coffee franchisees, you will receive a $20,000 product credit from Scooter’s Coffee’s affiliate, Harvest Roasting.

• You must use this credit within one year from the date you open your Store. This credit may be granted only for your first Store.

4.  Development Fee:  $5,000 for each Store (excluding your first Store) that you agree to develop under the MSD Agreement

• On execution of the MSD Agreement, you will pay Scooter’s Coffee a $5,000 development fee (“Development Fee”) for each Store (excluding your first Store) that you agree to develop under the MSD Agreement.

• Scooter’s Coffee does not count your first Store when calculating the Development Fee as you will sign your first Franchise Agreement and pay Scooter’s Coffee the Initial Franchise Fee for your first Store when you sign the MSD Agreement.

• There is no maximum number of Stores that Scooter’s Coffee would allow in an MSD Agreement, but it reserves the right to limit the number in any given MSD Agreement based on market conditions, Scooter’s Coffee’s strategic goals, and the wherewithal of the Developer, among other factors.

• Scooter’s Coffee will apply the Development Fee you pay for each Store under the MSD Agreement toward the Initial Franchise Fees for the respective Store to be developed after the first one.

• Scooter’s Coffee does not refund the Development Fee, once paid, under any circumstances.

5.  Royalty:  6% of Gross Sales

• Due Date:  Paid by electronic funds transfer every Tuesday for the preceding Reporting Period.

• Gross Sales includes all revenue from the Store, including sales made away from the Store premises. Gross Sales does not include sales taxes or customer discounts.

6.  Marketing Contribution:  2% of Gross Sales

• Due Date:  Paid by electronic funds transfer every Tuesday for the preceding Reporting Period.

• The Marketing Contribution will be deposited into the Marketing Fund. Scooter’s Coffee’s affiliate-owned Stores will contribute the same as franchisee-owned Stores.

• Scooter’s Coffee may establish regional marketing and advertising cooperatives and may reallocate all or a portion of this fee to regional marketing and advertising.

• Currently, Marketing Contributions are paid by electronic transfer of funds.

7.  Local Marketing and Advertising Commitment:  none currently, provided that Scooter’s Coffee may require you to spend up to 2% of Gross Sales for local marketing and advertising

• Due Date:  If required, you would spend the specified amount each calendar quarter.

• Scooter’s Coffee must give 60 days’ written notice to impose such a requirement.

8.  Regional Marketing and Advertising Cooperatives:  none currently. May vary, with recurring contributions up to 3% of Gross Sales.

• Due Date:  Usually on a monthly basis, based on prior month’s Gross Sales, or as directed by co-op.

• As of the date of the 2017 Franchise Disclosure Document, there are no established cooperatives.

• Affiliate Stores contribute on the same basis as franchised Stores.

• Regional Advertising Cooperative Fee may be offset by any Local Marketing and Advertising Commitment, if imposed.

• Maximum advertising expense of 5%.

9.  Cost of Marketing, Advertising, and Promotional Materials:  varies depending on the type of promotion and the type of materials used in the promotion

• Due Date:  Due upon invoice.

• If you purchase advertising or marketing materials from Scooter’s Coffee, it may, at its option, pass on the cost of these materials to you.

10.  Inventory Purchases From Franchisor or Affiliate:  varies according to sales volume

• Due Date:  Paid by electronic funds transfer on the date of invoice.

• Purchases are from Scooter’s Coffee’s affiliate, Harvest Roasting.

11.  Interest and Late Charge:  $25 late charge, plus the lesser of 1 1/2% per month, or highest rate of interest allowed by law

• Due Date:  Late fee automatically assessed; interest on demand.

• Begins to accrue the day after payments are due.

12.  Transfer Fee:  $10,000

• Due Date:  Before the transfer is effective.

• If you transfer your rights to an existing franchisee, Scooter’s Coffee may waive or reduce this fee.

13.  Successor Renewal Fee:  the greater of $10,000 or 25% of the then-current Initial Franchise Fee for the first Store

• Due Date:  When you sign the then-current Franchise Agreement.

• Payable if you opt for and qualify for a successor franchise at the end of the initial term.

14.  Inspection and Audit Fee:  interest on past due amount at 18%, or highest rate of interest allowed by law, plus costs of audit

• Due Date:  15 days after receipt of Scooter’s Coffee’s notice to you of any underpayment.

• Costs of audit payable only if you understate your Gross Sales by 3% or more, do not submit reports to Scooter’s Coffee, or do not cooperate in performance of the inspection and audit.

• Interest payable if you understate your Gross Sales by any amount.

15.  Alternative Supplier Approval Fee:  you must reimburse Scooter’s Coffee for the actual cost of any testing and the reasonable cost of its investigation

• Due Date:  Upon approval or disapproval.

• You must make a written request for approval. Scooter’s Coffee will respond within thirty days after receiving your written request.

16.  Costs and Attorneys’ Fees:  will vary under the circumstances

• Due Date:  As incurred.

• Payable only if you do not comply with the Franchise Agreement.

17.  Indemnification:  will vary depending on nature of the claim involved

• Due Date:  As incurred.

• You must reimburse Scooter’s Coffee if it is held liable for claims arising from your Store’s operations.

18.  Insurance Premiums:  will vary depending on your location and insurer

• Due Date:  As incurred.

• If you fail to obtain or maintain required insurance, Scooter’s Coffee may obtain insurance on your behalf and seek from you reimbursement for insurance, including late charges.

19.  Relocation Fees:  minimum of $500 up to a maximum of $1,000, depending on expenses Scooter’s Coffee incurs

• Due Date:  $500 due when you submit request to relocate and remainder, if any, due before opening.

• Payable only if you relocate your Store during the term of your Franchise Agreement. You pay all costs of relocating.

20.  Additional Training Fee:  $500 per person

• Due Date:  Before training begins.

• Training for two people is included in the Initial Franchise Fee. This fee is payable only if you choose to train more than two people or if you send a new Designated Manager to training.

21.  Tax Indemnification:  Scooter’s Coffee may collect from you the cost of all sales and related taxes arising from its licensing of intellectual property (such as the Royalty fees) to you in the state where your Store is located, as well as any assessment on fees and any other revenue it receives from you

• Due Date:  Payable when applicable, by electronic funds transfer.

• Only imposed if state collects these taxes or assessments from Scooter’s Coffee.