If you are considering The Barbershop A Hair Salon For Men franchise, don’t get blindsided by these 15 important franchise fees (from the initial franchise fee, to the royalty fee, to 13 other fees found in Items 5 and 6 of The Barbershop A Hair Salon For Men’s 2017 FDD).
1. Initial Franchise Fee (per location): $8,000 to $30,000
- Except as described in this Item, all new franchisees pay a $52,500 lump sum franchise fee when they sign a Multi-Unit Development Amendment (MUDA) ($30,000 for the first Franchise location, $12,500 for the second Franchise location, and $10,000 for the third Franchise location), and have the right to open 3 The Barbershop A Hair Salon For Men stores within a specified area and during a specified time period.
- In very rare circumstances, and if the franchisor agrees to award a single store Franchise Agreement or a 2-store MUDA, the franchisee will pay a $30,000 lump sum franchise fee when the franchisee signs a Franchise Agreement for a single store, or a $45,000 lump sum franchise fee when the franchisee signs a Franchise Agreement with a 2-store MUDA.
- The franchisor will only grant a 2-store MUDA if your store is in a city of less than 100,000 people and is at least 120 miles from any city that has more than 50,000 people.
- If the franchisor grants you a single store Franchise Agreement or a 2-store MUDA, you have no rights to buy additional franchises at a reduced price. There are no refunds under any circumstances.
- Under the MUDA, you must sign a separate Franchise Agreement before you open each store. There are no refunds if you do not open the additional stores on time, or under any other circumstances.
- If you agree to open more than 3 stores under a MUDA, the initial franchise fee for each store after the third store is $8,000 per store if these licenses are purchased at the time the MUDA is executed.
- If you purchase the right to open an additional The Barbershop A Hair Salon For Men store after you sign the MUDA, the initial franchise fee for each additional store is $12,500. The price of $12,500 for an additional store, after you sign a MUDA, is guaranteed for 3 years. After 3 years, the initial franchise fee for each store will be the then-current fee as stated in the then-current Offering Circular.
- The franchise fees will be uniform for each franchisee. The franchisor reserves the right to modify the franchise fee structure on a case-by-case basis in writing.
2. Royalty: 4.5% of Gross Sales from the first day a store is open. In order to encourage ownership of multiple locations, the royalties decrease with ownership of a certain number of locations.
- Due Date: Monthly, within 10 days after end of month.
3. Website and SEO Fee: $1,000 annually per location
- Due Date: January 2nd.
- The main website transfers customers to sites for individual locations.
4. Training Fee: $250 per day including travel days, plus all expenses including airfare, lodging, and meals
- Due Date: Training fee due upon invoice; expenses to be paid as incurred.
5. System Modifications: limited to (i) $1 in first year of term; and (ii) $20,000 during entire term
- Due Date: As required.
- If the franchisor decides to modify the System by requiring new equipment, fixtures, software, trademarks, etc., you must make the modifications at your expense.
6. Interest: the lesser of 1.5% per month, or the maximum permitted by law
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- Due Date: Upon invoice.
- Interest may be charged on all overdue amounts.
7. Fee for Failure to Maintain POS Computer System Communication: $35 per week for each week, or portion of a week, that your POS Computer System is not maintained so that the franchisor can access your data
- Due Date: Within 7 days of end of week that the franchisor cannot access your Computer System.
8. Transfer Fee: $3,000 for first store; $1,000 for each additional store in same transaction
- Due Date: Prior to transfer.
- Transfer fees do not apply to assignments of interest to an entity controlled by you.
9. Termination Fee: $20,000, plus 50% of estimated royalties for remainder of term
- Due Date: Upon termination.
10. Audit: cost of audit
- Due Date: When billed.
- You must pay the cost of an audit, inspection, and professional fees if the franchisor finds a discrepancy of 5% or greater in any information you reported, or an underpayment of 1.5% or more of any fees due.
11. Indemnification: all costs, including attorneys’ fees
- Due Date: Upon invoice.
- You defend suits at your cost and hold the franchisor harmless against suits involving damages resulting from your operation of the Franchised Business.
12. Costs of Enforcement: all costs, including attorneys’ fees
- Due Date: Upon invoice.
- You will reimburse the franchisor for all costs in enforcing obligations if it prevails.
13. Alternative Product Review Fee: reasonable costs, not to exceed $1,000
- Due Date: As incurred.
- Applies to new suppliers from which you wish to purchase, or products you wish to purchase, that the franchisor has not previously reviewed.
14. Additional Operations Assistance: $120 per hour
- Due Date: As incurred.
- If additional requested assistance exceeds normal usage, you must pay for requested assistance.
15. Additional Training: market rates, plus your expenses as well as your employees’ expenses in attending, including salaries
- Due Date: Time of service.
- You must pay for additional training if you request it.
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