Considering a Hot Dog on a Stick Franchise? Don’t Overlook These 26 Important Franchise Fees

Updated November 6, 2019.

If you are considering a Hot Dog on a Stick franchise, don’t get blindsided by these 26 important franchise fees (from the initial franchise fee, to the royalty fee, to 24 other fees found in Items 5 and 6 of Hot Dog on a Stick’s 2019 FDD).

1.  Initial Franchise Fee:  $15,000 to $25,000

• If Hot Dog on a Stick grants you a franchise for a Traditional Store, then when you sign the Franchise Agreement, you must pay Hot Dog on a Stick an initial franchise fee (“Franchise Fee”) of $25,000. The Franchise Fee for a Non-Traditional Store is $15,000.

• Hot Dog on a Stick participates in the International Franchise Association’s Veterans Transition Franchise Initiative (“VetFran”) program to provide franchise opportunities to qualifying veterans. The Hot Dog on a Stick Patriot Program incentive provides a 25% reduction in the Franchise Fee due under a single unit Franchise Agreement for Traditional Stores only. This incentive may not be combined with any other incentive program and applies only to the first Store.

2.  Site Selection Assistance:  $300 per employee or agent for each full or partial day after the second day, not to exceed five days

• Hot Dog on a Stick will review your submittal package for your proposed site and determine whether to accept your proposed site. It will conduct an on-site evaluation if it considers it necessary and appropriate as part of its evaluation of your submittal package.

• If Hot Dog on a Stick determines that on-site evaluation is necessary and appropriate (on its own initiative), it will provide the evaluations (up to 2 days, unless you and Hot Dog on a Stick agree otherwise), at its own expense, although it reserves the right to charge you an additional fee for this service.

• If Hot Dog on a Stick charges this fee, the fee will be its out-of-pocket expenses for each proposed site for which it conducts an onsite evaluation. Hot Dog on a Stick expects this fee to be $300 per employee or agent for each full or partial day after the second day, not to exceed five days.

3.  Grand Opening Marketing Fee:  $3,000

• Hot Dog on a Stick reserves the right to collect the grand opening marketing fee of $3,000 when you sign your Franchise Agreement.

• If Hot Dog on a Stick collects this fee, it will either: (i) reimburse you for your documented grand opening marketing expenditures that it has pre-approved, up to $3,000; or (ii) directly pay your vendors for your grand opening marketing expenditures that it has pre-approved, up to $3,000.

4.  Initial Development Fee:  $5,000 per Store to be opened under the Area Development Agreement

• If Hot Dog on a Stick grants you development rights, then you will pay Hot Dog on a Stick a Development Fee of $5,000 per Store to be opened under the Area Development Agreement when you sign the Area Development Agreement.

• The Development Fee will vary based on the number of Stores that you agree to develop (with a typical minimum of 3 Stores), regardless of whether the stores are Traditional or Non-Traditional Stores.

• The Franchise Fees for Stores opened under a Development Agreement (with a typical minimum of 3 Stores) will be $20,000, and $10,000 for each additional Store thereafter. For each Store, you must sign Hot Dog on a Stick’s then-current form of Franchise Agreement to govern the operation of that Store.

5.  Royalty Fee:  6% of your Net Sales for the preceding month

• Due Date:  Currently, 6:00 p.m. (Eastern Time) on the 10th day of the following month.

6.  Marketing Fee:  2% of your Net Sales for the preceding month

• Due Date:  Currently, 6:00 p.m. (Eastern Time) on the 10th day of the following month.

7.  Local Marketing Requirement:  2% of your Net Sales

• Due Date:  Annually.

8.  Interest:  18% per year (or maximum legal rate, if less)

• Due Date:  On demand.

• If you fail to make a payment due to Hot Dog on a Stick on time, you must pay it interest on the amount owed from the due date until paid in full.

9.  Late Fee:  $25 per week

• Due Date:  On demand.

• If you fail to make a payment due to Hot Dog on a Stick on time, you must pay it the Late Fee.

• Hot Dog on a Stick may increase the Late Fee on 60 days’ written notice. However, it may not increase the Late Fee more than once in any 12-month period.

10.  Additional Training:  currently, $300 per employee or agent for each full or partial day

• Due Date:  Before training begins.

• Hot Dog on a Stick may charge for additional training for (i) training persons repeating a course or replacing a person who did not pass, (ii) training new employees, and (iii) optional training it provides.

• You must pay for any travel and living expenses, wages, and other expenses your trainees incur.

11.  Additional Consulting Services:  currently, $300 per employee or agent for each full or partial day, plus their travel and living expenses

• Due Date:  Within 15 days after services are rendered.

• Payable if Hot Dog on a Stick provides requested consulting services in person at a place other than its offices.

12.  Assigned Trainers:  Hot Dog on a Stick’s actual costs and expenses, including travel and living expenses for its trainers

• Due Date:  Within 10 days of invoice.

• If you fail to maintain Hot Dog on a Stick’s quality and service standards, it may, in its sole judgment, assign trainers to the Store to retrain your employees and restore service levels.

13.  Product, Service, Supplier, and Service Provider Review:  Hot Dog on a Stick’s reasonable cost of inspecting the supplier, testing the proposed product, or evaluating the service provider or proposed service, including personnel and travel costs; this cost will not exceed $5,000

• Due Date:  On demand.

• Payable if you wish to offer products or use any supplies, equipment, or services that Hot Dog on a Stick has not approved, or wish to purchase from a supplier or service provider that Hot Dog on a Stick has not approved, whether or not it approves the item, service, supplier, or service provider.

14.  60-Day Extension Fee:  $5,000

• Due Date:  Upon expiration of the Site Securitization Deadline.

• If you do not enter into and provide Hot Dog on a Stick with a copy of the purchase agreement or Site Lease, as applicable, in accordance with the requirements of the Franchise Agreement on or before the Site Securitization Deadline, so long as you are otherwise in compliance with your obligations under the Franchise Agreement and are using best efforts to secure an extension to the Site Securitization Deadline, Hot Dog on a Stick will grant you a 60-day extension to the Site Securitization Deadline in exchange for your payment of a $5,000 extension fee.

15.  Relocation Charge:  $2,000

• Due Date:  On demand.

• Payable if you ask Hot Dog on a Stick to review a new proposed site, whether or not it approves the site.

16.  Transfer Fee:  $10,000 for a transfer of your Store or Franchise Agreement

• Due Date:  At or before transfer.

• Payable only on transfer of Franchise.

• Upon the submission of a proposal to transfer your Store or Franchise Agreement, you must pay Hot Dog on a Stick a non-refundable deposit of $2,000 in connection with the costs it will incur in evaluating that transfer.

• If you move forward with the transfer, the deposit will be applied toward the transfer fee.

17.  Successor Fee:  Hot Dog on a Stick’s then-current Successor Fee; currently, $7,500

• Due Date:  On signing a successor Franchise Agreement.

• You may enter into a successor Franchise Agreement for one additional 10-year term, if you meet certain conditions.

18.  Insurance:  cost of the premium, plus a reasonable fee for Hot Dog on a Stick’s services in procuring the insurance

• Due Date:  On demand.

• Payable only if you fail to maintain the minimum insurance Hot Dog on a Stick requires and it chooses to procure the required insurance for you.

19.  Audit:  cost of audit, plus travel and living expenses, plus interest on the amount of the underpayment at an annual rate of the lesser of 18% or the maximum interest rate permitted by law

• Due Date:  Within 15 days of demand.

• Payable if audit or review shows an understatement of 3% or more of your Net Sales for any period.

20.  Inspection:  Hot Dog on a Stick’s reasonable expenses incurred in inspecting your business, including travel and living expenses, wages, and other expenses for its employees; this cost will not exceed $5,000

• Due Date:  On demand.

• Payable if inspection needed due to your repeated or continuing failure to comply with any provision of the Franchise Agreement.

21.  Convention or Meeting Attendance:  as Hot Dog on a Stick determines based on its costs of holding the convention or meeting

• Due Date:  On demand.

• Hot Dog on a Stick does not currently charge an attendance fee, but it reserves the right to do so.

22.  Remedial Expenses:  Hot Dog on a Stick’s reasonable expenses incurred in correcting your operational deficiencies; this cost will not exceed $10,000 per deficiency

• Due Date:  On demand.

• Payable if Hot Dog on a Stick corrects deficiencies that it has identified during a site inspection and that you failed to correct within a reasonable time after notice from it.

23.  Enforcement Expenses:  Hot Dog on a Stick’s reasonable cost of de-identifying your Store

• Due Date:  On demand.

• Payable if your Franchise Agreement expires or is terminated, you fail to de-identify your Store, and Hot Dog on a Stick takes steps to do so.

24.  Indemnification:  Hot Dog on a Stick’s liabilities, fines, losses, damages, costs, and expenses (including reasonable attorneys’ fees) (“Losses”)

• Due Date:  On demand.

• Payable if Hot Dog on a Stick incurs Losses due to your activities under the Franchise Agreement or your activities relating to the Store.

25.  Liquidated Damages:  varies

• Due Date:  On demand.

• Payable if Hot Dog on a Stick terminates your Franchise Agreement based on your default or if you terminate the Franchise Agreement in violation of its terms.

26.  Test Products:  $50 to $500

• Due Date:  On demand.

• If Hot Dog on a Stick requires, you must participate in market research programs or test marketing of new products and services, and must purchase a reasonable quantity of the test products.