Considering a Spavia Day Spa Franchise? Don’t Overlook These 35 Important Franchise Fees

Updated February 4, 2021.

If you are considering a Spavia Day Spa franchise, don’t get blindsided by these 35 important franchise fees (from the initial franchise fee, to the royalty fee, to 33 other fees found in Items 5 and 6 of Spavia Day Spa’s 2020 FDD).

1.  Initial Franchise Fee:  $49,500

• The initial franchise fee for a single Franchised Business (either a Spavia Business or a Sway Business) is $49,500 (the “Initial Franchise Fee”). Each Franchise Agreement will grant you the right to operate one Franchised Business (either a Spavia Business or a Sway Business).

• Your Initial Franchise Fee is fully earned by Spavia upon payment, and is not refundable under any circumstances. The Initial Franchise Fee is payable when you sign your Franchise Agreement.

2.  Training Fee:  $5,000

• Upon signing the Franchise Agreement, you must pay Spavia an initial training fee in the amount of $5,000 (the “Initial Training Fee”), which will cover tuition to attend and otherwise participate in Spavia’s proprietary initial training program (the “Initial Training Program”) for you, if you are an individual (or the principal operator, if you are a business entity), and for two additional individuals.

• The Initial Training Fee does not cover costs and expenses incurred in connection with attending or otherwise participating in any part of Spavia’s Initial Training Program, which may include travel, lodging, meals, or salaries for your participants.

3.  Development Fee:  varies

• Franchisees may also purchase the rights to open a minimum of 3 Franchised Businesses (either only Spavia Businesses or only Sway Businesses) by signing Spavia’s Development Agreement and paying a Development Fee. Franchisees may not mix and match Spavia Businesses and Sway Businesses.

• Your Development Fee will depend on the number of Franchised Businesses Spavia grants you the right to open within the Development Area and is calculated as follows: (i) $125,000 for the right to open 3 Franchised Businesses, plus an additional $40,000 for the right to open each additional Franchised Business (up to a total of 5); (ii) $35,000 per Franchised Business if you agree to open and operate between 6 and 9 Franchised Businesses; and (iii) $30,000 per Franchised Business if you agree to open and operate 10 or more Franchised Businesses.

• To open additional Franchised Businesses under a Development Agreement, you will be required to sign Spavia’s then-current form of Franchise Agreement for each Franchised Business (either a Spavia Business or a Sway Business) you wish to open under your Development Agreement, but you will not be required to pay an Initial Franchise Fee or the Initial Training Fee for additional outlets (all other fees will apply).

4.  Royalty Fee:  6% of weekly Gross Sales

• Due Date:  On Tuesday of each week based on the Gross Sales from the preceding Monday through Sunday (“Business Week”).

• You must achieve certain levels of Gross Sales in the operation of your Franchised Business each calendar month once your Franchised Business has been open for a period of 1 year (your “Minimum Performance Standards”).

• If your Franchised Business does not achieve the expected Minimum Performance Standards for 3 consecutive months of operation, then you will be required to pay a shortfall payment amounting to the difference between the (a) Royalty Fee due if these Minimum Performance Standards were met in each of these 3 months, and (b) the actual amount you paid in Royalty Fees based on your operation over that time period (the “Royalty Shortfall Payment”).

5.  Fund Contributions:  1% of weekly Gross Sales (your “Fund Contribution”)

• Due Date:  Same as Royalty Fee.

6.  Local Advertising Requirement:  $50,000 within the first 12 months of operation (your “Local Advertising Requirement”), with at least $15,000 to $20,000 (as Spavia designates) to be spent within your first 3 months of operation (your “Grand Opening Advertising”); potential future Local Advertising Requirement if Minimum Performance Standards are not met

• Due Date:  As incurred.

• You will not have a local advertising requirement after your first year of operations, unless you fail to meet your Minimum Performance Standards for 3 consecutive months of operation (in which case your Local Advertising Requirement will be a minimum of $15,000 for each 3-month period of operations until you once again achieve your Minimum Performance Standards over a full 3-month period of operations).

7.  Local Advertising Payment:  the difference between the amount you spent on local advertising each year and your Local Advertising Requirement

• Due Date:  Payable after receipt of invoice.

• If you fail to meet your required Local Advertising Requirement on local advertising, you must pay the difference between the amount you spent and the required advertising expenditure, which will be contributed to the Fund, if established, or Spavia.

8.  Advertising Cooperative Fee:  $1,250/month (not currently charged), unless the cooperative votes for a larger amount to be expended as part of the cooperative

• Due Date:  Upon demand.

• Payable to Spavia if it assigns your Franchised Business to a regional advertising cooperative. Any payment for a regional advertising cooperative will be credited against your Local Advertising Requirement.

9.  Unauthorized Advertising Fee:  $500 per occurrence

• Due Date:  On demand

• This fee is payable to Spavia or, if established, the Fund, if you use unauthorized advertising in violation of the terms of the Franchise Agreement.

10.  Insurance:  will vary according to circumstances

• Due Date:  Upon demand.

• If you fail to obtain required insurance, Spavia may obtain such insurance at your expense (but is not required to do so) and charge you a service fee to do so. Otherwise, these payments are made directly to your third-party insurance provider.

11.  Catastrophe Fee:  6% of any insurance proceeds

• Due Date:  As incurred.

• You will reimburse 6% of any insurance proceeds due to business interruption as a result of your Franchised Business being closed as a result of a casualty event or any other reason.

12.  Additional Training or Assistance Fee:  Spavia’s then-current fee (currently $2,500 per additional person) for initial training and Spavia’s then-current training tuition fee (currently $300/day for each trainer Spavia provides) (together, the “Additional Training Fee”)

• Due Date:  As incurred.

• Spavia provides initial training for up to 3 people for the Initial Training Fee. Spavia may charge you for training additional persons, newly-hired personnel, refresher training courses, advanced training courses, and additional or special assistance or training you need or request.

• You are responsible for any expenses incurred by you or your employees in connection with attending training.

13.  Refresher Training Fee (upon renewal):  then-current training fee (currently $2,500)

• Due Date:  30 days before the expiration of the then-current term of your Franchise Agreement.

14.  Technology Fee:  then-current fee (currently $455/month)

• Due Date:  As invoiced.

15.  Call Center Fee:  then-current fee (currently, Spavia does not charge this fee)

• Due Date:  As invoiced.

• Spavia reserves the right to establish a system-wide call center and you will be responsible for any related subscription fees at Spavia’s or its approved supplier’s then-current rate.

16.  Conference Attendance Fee:  Spavia’s then-current registration fee to attend any Annual Conference Spavia designates, currently $400 to $600

• Due Date:  As incurred.

17.  New Product or Supplier Testing:  the actual costs Spavia incurs in connection with the evaluation/testing procedure (estimated to be approximately $500 to $2,000)

• Due Date:  As incurred.

18.  Replacement of Operations Manual:  then-current fee (currently $500)

• Due Date:  On demand.

• Payable if any hard copy of the Operations Manual is lost, stolen, destroyed, or significantly damaged.

19.  Customer Issue Resolution:  varies; reasonable costs Spavia incurs for responding to a customer complaint, which will typically be between $20 and $200

• Due Date:  After receipt of invoice.

20.  Payment Service Fee:  up to 4% of total charge

• Due Date:  As incurred.

• If payment is made to Spavia or its affiliate by credit card for any fee required, Spavia may charge a service charge of up to 4% of the total charge.

21.  Interest:  1.5% per month or highest commercial contract interest rate applicable laws permit

• Due Date:  Upon demand.

• Payable if any payment due to Spavia or its affiliate is not made by the due date.

22.  Dishonored Check; Insufficient Funds Charge:  $30

• Due Date:  Upon demand.

23.  Late Reporting Fees:  $10 per day, starting the 11th day after a report is due to Spavia

• Due Date:  Upon demand.

24.  Audit Fees:  actual cost of audit and inspection, any understated amounts, and any related accounting, legal, and travel expenses

• Due Date:  Upon billing after audit.

• Payable if audit reveals that you have underreported the Gross Sales of your Franchised Business by 2% or more for any designated reporting period or you fail to submit required reports.

25.  Management Fee:  up to 8% of the Gross Sales of your Franchised Business during the period of time Spavia or its representative manages your Franchised Business on your behalf (the “Management Fee”), plus the costs and expenses it incurs

• Due Date:  As incurred.

• Payable if Spavia manages your Franchised Business after: (1) you cease to perform your responsibilities (whether due to retirement, death, disability, or for any other reason) and you fail to find an adequate replacement principal operator within 30 days; (2) you are in material breach of the Franchise Agreement; or (3) upon a crisis management event.

26.  Professional Fees and Expenses:  will vary according to circumstances

• Due Date:  Upon demand.

• You must reimburse Spavia for any legal, accounting, or other professional fees (“Professional Fees”) that it incurs as a result of any breach or termination of your Franchise Agreement or as a result of your indemnity obligations.

27.  Collection Charges:  varies

• Due Date:  Upon demand.

• You must pay all collection charges associated with Spavia’s efforts in collecting any amounts owed to you or Spavia under the Franchise Agreement.

28.  Default Fee:  $100 per day

• Due Date:  Upon demand.

• This fee is due in the event that you are in default and is in addition to your indemnification obligations.

29.  Indemnification:  will vary according to circumstances

• Due Date:  Upon demand.

• You must indemnify and reimburse Spavia for any expenses or losses, including professional fees, that it or its representatives incur related in any way to your Franchised Business or franchise.

30.  Renewal Fee:  $10,000

• Due Date:  At the time you sign the new Franchise Agreement.

31.  Relocation Fee:  $2,000 if you decide to relocate your Franchised Business, plus your expenses to de-identify the prior premises

• Due Date:  When you submit a letter requesting consideration of a new location.

32.  De-Identification:  all amounts incurred by Spavia related to de-identification

• Due Date:  As incurred.

• Payable if Spavia must de-identify your Franchised Business premises upon your termination, relocation, or expiration.

33.  Transfer Fee (both Franchise Agreement and Development Agreement): FA: then-current fee, currently $15,000; ADA: then-current fee, currently $15,000

• Due Date:  $1,000 nonrefundable deposit at time of transfer application submittal and the remaining balance of fee at time of the approved transfer.

34.  Broker Fees:  Spavia’s actual cost of the brokerage commissions, finder’s fees, or similar charges

• Due Date:  As incurred.

• If you transfer your Franchised Business to a third party or purchaser, you must reimburse all of Spavia’s actual costs for commissions, finder’s fees, and similar charges.

35.  Liquidated Damages:  will vary under the circumstances

• Due Date:  Within 15 days after termination of the Franchise Agreement.

• Due only if Spavia terminates the Franchise Agreement before the end of the term because of your material breach, or you terminate the Franchise Agreement without legal cause.