Considering a Seva Beauty Franchise? Don’t Overlook These 21 Important Franchise Fees

If you are considering a Seva Beauty 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 Seva Beauty’s 2017 FDD).

1.  Initial Franchise Fee:  $39,000

• The initial franchise fee for the Studio is $39,000 (“Initial Franchise Fee”). The Initial Franchise Fee is paid in a lump-sum when you sign the Franchise Agreement and is not refundable under any circumstances.

2.  Leasehold Administration Fee:  $15,000

• In the event you enter a Sublease with Seva Beauty or Seva Beauty Leasing, you will pay Seva Beauty a $15,000 leasehold administration fee (“Leasehold Fee”), which is payable after you select and Seva Beauty approves a site for the Studio.

• The Leasehold Fee is fully earned upon receipt and is not refundable under any circumstance.

3.  Pre-Opening Administration Fee:  $10,000

• You will pay Seva Beauty a pre-opening administration fee of $10,000 (“Pre-Opening Fee”), which is payable after you select and Seva Beauty approves a site for the Studio, and is fully earned and not refundable under any circumstance.

4.  Development Rights Fee:  $19,500 for each additional Studio you choose to open under the Development Rider

• In the event you enter into a Development Rider, you will pay Seva Beauty a “Development Rights Fee” of $19,500 for each additional Studio you choose to open under the Development Rider.

• The Development Rights Fee is not refundable under any circumstances.

5.  Royalty:  6% of Gross Sales or $250 per week, whichever is greater

• Due Date:  Payable weekly by Tuesday for the preceding week.

6.  Rent:  $550 to $15,000

• Due Date:  Monthly.

• Payable if you enter a Sublease with Seva Beauty or its affiliate.

• You will also be responsible for any and all fees assessed against Seva Beauty, including by taxing authorities and/or the landlord, on account of rental payments and other amounts paid to Seva Beauty and/or the landlord.

• Should you enter a Sublease, you will pay the same amount Seva Beauty pays under the master lease with a third party.

7.  Brand Fund Contribution:  2% to 5% of Gross Sales

• Due Date:  Payable electronically and at the same time and in the same manner as the Royalty.

• Currently, you must contribute 2% of Gross Sales to the Brand Fund. Seva Beauty may collect up to 5% of Gross Sales at any time upon 30 days’ notice to you.

8.  Late Fees:  $100 per instance

• Due Date:  Upon demand.

• For failure to make payments or file reports on time.

9.  Interest:  18% per annum of balance due or highest commercial contract interest rate law allows, but not less than $100

• Due Date:  With payment of past due amount.

• Due on all overdue amounts.

• Interest accrues from the original due date until payment is received in full.

10.  Initial Training for Additional or Replacement Manager:  Seva Beauty’s then-current training fee per person, plus expenses. Seva Beauty’s current rate charged for ongoing training is $1,000 per person.

• Due Date:  Upon demand.

• Seva Beauty trains 3 people at no charge.

• If you request that Seva Beauty provide training for an additional or replacement manager, you must pay Seva Beauty’s then-current training fee and reimburse it for any expenses it may incur in providing the additional training.

11.  Additional Training/Support:  as determined by Seva Beauty. Seva Beauty may charge an hourly rate, or a flat fee (including a virtual training fee) for the additional training/support services. Currently, the hourly rate is $150 per hour.

• Due Date:  Upon demand.

• Seva Beauty may require you to undergo additional training, including through a virtual, Internet, or mobile application based platform, during the term of your Franchise Agreement. Seva Beauty may also, at its option, provide additional support services to you during the term.

• If Seva Beauty requires additional training or provide additional support services, it has the right to charge you a fee for the services, which may be at its then-current hourly rates for such services, or a flat fee.

12.  Transfer:  Transfer Fee of $19,500 and Training Fee of $3,000

• Due Date:  Payable at time of transfer.

• These fees are only payable when you sell your franchise to a third person.

• The training fee is for training 3 people in connection with the transfer.

13.  Renewal Fee:  25% of then-current Initial Franchise Fee

• Due Date:  Upon execution of new Franchise Agreement.

• Charge for renewing the franchise after expiration of term.

14.  Audit:  cost of audit, 15% of underpayment, plus 18% interest from date of underpayment

• Due Date:  Upon demand.

• Payable only if audit shows an understatement of at least 3% of gross sales for any period.

• Should an audit show an understatement for any period that exceeds 25% or more of your Gross Sales, Seva Beauty may immediately terminate the Franchise Agreement.

15.  Insurance:  Seva Beauty’s actual costs of insurance for the period of coverage, plus a service charge equal to 25% of the cost of new required insurance for the period of coverage

• Due Date:  Upon demand.

• A service charge of 25% of the annual cost of new insurance is payable to Seva Beauty if you fail to carry the insurance it requires and if it decides to purchase it on your behalf (although it is not obligated to do so).

16.  Inoperative Equipment Fee:  $100 per day

• Due Date:  As incurred.

• If any component of your POS system, including your IP camera, iPad, receipt printer, credit card terminal, or other equipment is inoperative, Seva Beauty may charge you a per-day fee until fixed.

17.  Conventions or Franchisee Meetings:  up to $1,000

• Due Date:  Upon demand.

18.  Indemnification and Defense:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Seva Beauty for losses that it suffers resulting from the operation of the Studio.

• Seva Beauty may retain its own legal counsel. You must reimburse Seva Beauty for its legal and other professional expenses in connection with the claim.

• No insurance coverage that you or any other party maintains will be deemed a substitute for your indemnification obligations.

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

• Due Date:  As incurred.

• Payable only if you do not comply with the Franchise Agreement and Seva Beauty is the prevailing party in any relevant litigation or arbitration.

20.  Gift Card Program:  will vary. Seva Beauty does not currently charge a fee for participation in the Gift Card Program, but may do so in the future.

• You must participate in Seva Beauty’s gift card program.

• Gift cards are available for sale through Seva Beauty’s website and at all Studios in the System. Gift cards may be redeemed at any Studio in the System, regardless of where they were purchased.

21.  Liquidated Damages:  will vary under circumstances

• Due Date:  As incurred.