Considering a Best in Class Education Center Franchise? Don’t Overlook These 29 Important Franchise Fees

Updated October 11, 2020.

If you are considering a Best in Class Education Center franchise, don’t get blindsided by these 29 important franchise fees (from the initial franchise fee, to the royalty fee, to 27 other fees found in Items 5 and 6 of Best in Class Education Center’s 2020 FDD).

1.  Franchise Fee:  $25,000 to $35,000

• If you are purchasing your 1st Best in Class Education Center franchise, you will pay the franchisor a $35,000 initial franchise fee, which includes a $10,000 initial training fee for the pre-opening initial training program that the franchisor will conduct.

• If you are purchasing your 2nd Best in Class Education Center franchise, you will pay the franchisor a $30,000 initial franchise fee. If you are purchasing your 3rd or subsequent franchise, you will pay the franchisor a $25,000 initial franchise fee.

• Note that if you acquire a satellite office that is located outside of your Territory, the satellite office will be counted as a Best in Class Education Center for purposes of determining the initial franchise fee you will pay for the next dedicated brick and mortar Best in Class Education Center.

• If your satellite office is located within the Territory for your 1st brick and mortar Best in Class Education Center, then the satellite office will not affect the initial franchise fee you pay for your next brick and mortar Best in Class Education Center.

• There are no discounts on the satellite office fee, regardless of the number of franchises purchased.

• The entire initial franchise fee is payable in full at the time you sign the Franchise Agreement.

• The franchisor will refund 50% of the initial franchise fee if it terminates the Franchise Agreement before you complete the initial training program (unless it terminates because you choose not to attend initial training, in which case no refund will be issued), and you sign a General Release in its favor.

2.  License Fee:  $2,000

• At the time you sign the Franchise Agreement, you must pay the franchisor’s affiliate, LBIS, a one-time non-refundable initial license fee of $2,000 for the BC Portal software system. The initial license fee is uniformly imposed and fully earned upon receipt.

• The initial license fee is due for each location you open, including any “satellite location.”

3.  Expense Reimbursement:  $1,340 to $3,730

• The franchisor will visit your Center to provide grand opening assistance. You must reimburse it for all travel and living expenses that it incurs relating to this assistance. The franchisor estimates the amount of this reimbursable expense will range from $1,340 to $3,730.

• In addition, if the franchisor sends more than 1 trainer, it may charge you an additional fee of up to $350 for each work and travel day for a minimum of 2 days.

• You must pay the franchisor the sum of $1,500 as a pre-paid estimate of these expenses at least 1 month prior to your grand opening date. The franchisor will refund any unused money after grand opening assistance has been completed, but you must promptly pay it any additional amounts it incurs in excess of the $1,500 pre-paid amount.

• The reimbursement is uniformly imposed and non-refundable (except for any unused funds).

4.  Site Drawing Fee:  $300 per additional drawing (after the first two)

• At the time your site is approved, the franchisor will assist you with up to 2 site drawings to determine the layout of your Center. If you require additional drawings, the franchisor may charge you a fee of $300 per additional drawing.

5.  Grand Opening Marketing Fee:  $10,000

• You must pay the franchisor a nonrefundable $10,000 grand opening marketing fee at the time you sign the Franchise Agreement. The franchisor spends all of these funds on grand opening marketing activities to promote your Center. The franchisor does not keep any portion of this fee.

• The grand opening marketing fee is uniformly imposed.

6.  Development Fee:  the full initial franchise fee for each franchise you commit to develop under your development schedule

• If you sign an Area Development Agreement, you will pay the franchisor the full initial franchise fee for each franchise you commit to develop under your development schedule (referred to as your “development fee”).

• Your initial franchise fee will be (subject to any applicable discounts listed above) $35,000 for your first franchise, $30,000 for your second franchise, and $25,000 for each additional franchise you commit to develop.

7.  Royalty Fee:  greater of (i) $250; or (ii) 12% of monthly Gross Revenues and Affiliate Program Revenues, plus 6% of Special Program Revenues

• Due Date:  7th day of month for prior month’s operations.

• You must send the franchisor monthly reports of your Gross Revenues, Special Program Revenues, and Affiliate Program Revenues.

8.  Brand Development Fund Fee:  up to 3% of monthly Gross Revenues (currently 2% of Gross Revenues), plus 1% of Special Program Revenues

• Due Date:  7th day of month for prior month’s operations.

9.  Local Marketing Commitment:  $1,500 per month (months 2 through 12 after opening); greater of $1,000 per month or 4% of Gross Revenues (months 13 and beyond)

• Due Date:  As incurred (monthly).

• These amounts are not paid to the franchisor. Instead, you must spend these amounts locally to market and promote your Center.

• Any amounts that you pay the franchisor or its affiliates for the purchase of marketing materials will be credited towards your Local Marketing Commitment.

• Your grand opening marketing fee described in No. 5 above covers your minimum required marketing expenditure for the initial 30 days after you open.

10.  Franchise Management Training Fee:  $700 per day

• Due Date:  Before training begins.

11.  Periodic Training Fee:  $350 per day

• Due Date:  10 days after invoice.

12.  Technology Fee:  currently $100 per month, plus $10 per month for each additional email account you request

• Due Date:  7th day of month.

13.  Customer Service Fee:  up to $500 per year (currently $0)

• Due Date:  7th day of month.

14.  Conference Registration Fee:  up to $350 per attendee

• Due Date:  Prior to conference.

15.  Marketing Materials:  varies depending on item purchased

• Due Date:  10 days after invoice.

• The franchisor will provide you with its current price list at the time you sign the Franchise Agreement.

16.  Curriculum Distribution Fee:  2% of Gross Revenues, plus 1% of Special Program Revenues

• Due Date:  Paid on 7th day of month.

17.  Satellite Office Fee:  $12,000 per satellite office (if located outside your existing territory) or $5,000 per satellite office (if located inside your existing territory)

• Due Date:  At time you sign Satellite Office Addendum.

18.  Relocation Fee:  $1,000 for each proposed relocation site

• Due Date:  At time new site proposed.

• You must also reimburse the franchisor for any travel expenses it incurs in traveling to inspect your new proposed site.

• If the franchisor rejects your proposed relocation site, it will refund 75% of the Relocation Fee.

19.  Renewal Fee:  $2,500

• Due Date:  At time you sign Renewal Agreement.

20.  Transfer Fee:  60% of then-current initial franchise fee (40% if purchaser is an existing franchisee)

• Due Date:  Before transfer.

• Payable when you transfer or sell your franchise. No charge if franchise transferred to an entity that you control or for certain transfers of ownership interests between existing owners.

21.  Audit Fee:  actual cost of audit (including travel and lodging expenses for audit team)

• Due Date:  10 days after invoice.

• Payable only if the audit (i) reveals that you have understated any amount that you owe the franchisor by at least 3% or (ii) is necessary because you fail to furnish required information or reports to the franchisor in a timely manner.

22.  Fines:  up to $500 per incident

• Due Date:  Upon demand.

• Payable if you fail to comply with a mandatory standard or operating procedure and you do not cure the non-compliance within the time period the franchisor requires. It will deposit all fines into the Brand Development Fund.

23.  Late Fee:  lesser of 15% per annum (pro-rated on a daily basis) or highest rate allowed by applicable law, plus $100 per month

• Due Date:  10 days after invoice.

24.  Management Fee:  commercially reasonable rate

• Due Date:  10 days after invoice.

• If you default under the Franchise Agreement or the Managing Owner dies, the franchisor can designate a temporary manager to manage your Center until you cure the default or find a replacement Managing Owner, as applicable.

25.  Indemnification:  will vary with circumstances

• Due Date:  10 days after invoice.

• You must reimburse the franchisor if it is sued for claims relating to the operation of your Center or for damages it incurs due to your breach of the Franchise Agreement.

26.  Attorneys’ Fees and Costs:  will vary with circumstances

• Due Date:  Upon demand.

• You must reimburse the franchisor for all attorneys’ fees and other costs it incurs relating to your breach of any term of the Franchise Agreement or any other agreement with it or its affiliates.

27.  New Product or Supplier Testing:  cost of testing

• Due Date:  10 days after invoice.

• This covers the costs of testing new products or inspecting new suppliers you propose.

28.  Insurance:  actual cost of premiums, plus the franchisor’s costs and expenses

• Due Date:  10 days after invoice.

• If you fail to obtain and maintain the insurance the franchisor requires, and it elects to do so on your behalf, you must reimburse it.

29.  Early Termination Fee:  $5,000

• Due Date:  At time your Center ceases operation.

• Payable if you cease operating your Center without providing the franchisor with at least 180 days’ prior notice.

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