Considering a Twin Peaks Franchise? Don’t Overlook These 22 Important Franchise Fees

Updated August 30, 2020.

If you are considering a Twin Peaks franchise, don’t get blindsided by these 22 important franchise fees (from the initial franchise fee, to the royalty fee, to 20 other fees found in Items 5 and 6 of Twin Peaks’ 2020 FDD).

1.  Initial Franchise Fee:  $50,000

• You must pay Twin Peaks an initial franchise fee of $50,000 when you sign the Franchise Agreement. It is considered fully earned and non-refundable when paid.

• You also must reimburse Twin Peaks for any out-of-pocket attorneys’ fees that it incurs in connection with drafting negotiated amendments to your Franchise Agreement.

• If you purchase an existing Restaurant franchise, you do not pay an initial franchise fee. Instead, Twin Peaks receives a $12,500 transferee fee (which is not refundable).

2.  Development Fee:  100% of the initial franchise fee for the first Restaurant to be developed and 50% of the initial franchise fee for each additional Restaurant to be developed

• When you sign the Area Development Agreement, you will pay a development fee equal to 100% of the initial franchise fee for the first Restaurant to be developed and 50% of the initial franchise fee for each additional Restaurant to be developed under the Area Development Agreement.

• You also must reimburse Twin Peaks for any out-of-pocket attorneys’ fees that it incurs in connection with drafting negotiated amendments to your Area Development Agreement.

• When you sign the Franchise Agreement for the first Restaurant, Twin Peaks will credit $50,000 of your development fee payment to satisfy the $50,000 initial franchise fee due under the Franchise Agreement.

• When you sign each additional Franchise Agreement under the Area Development Agreement, you will sign the then-current form of Franchise Agreement that Twin Peaks offers. In addition, you will pay Twin Peaks the balance due for the initial franchise fee due under the Franchise Agreement, which will be the initial franchise fee minus the applicable portion of the development fee.

3.  Opening Training Team:  $60,000 to $75,000

• Twin Peaks provides an “Opening Training Team” of its trained representatives to provide on-site pre-opening and opening training, supervision, and assistance to you for up to 14 days based upon Twin Peaks’ assessment of the experience and training of your management personnel.

• You must pay for the compensation, costs of travel, lodging, meals, and miscellaneous costs of the Opening Training Team. Twin Peaks estimates that the costs for the Opening Training Team will range from $60,000 to $75,000.

• Except as otherwise described, the initial fees and payments are uniform in all cases.

4.  Royalty Fee:  5% of Gross Sales

• Due Date:  Every Tuesday for the preceding Reporting Period.

• You must pay the Royalty Fees by electronic funds transfer.

5.  Brand Fund Contribution:  up to 4% of Gross Sales; currently 2.5%

• Due Date:  Every Tuesday for the preceding Reporting Period.

• You must pay the Brand Fund Contribution by electronic funds transfer.

6.  Local Marketing Expenditure/Advertising Cooperative:  0.5% of Gross Sales

• Due Date:  Periodically.

• No advertising cooperative fee is currently assessed.

7.  Marketing Materials:  varies

• Due Date:  Upon invoice.

• Twin Peaks may make available to you certain marketing material for display in the Restaurant or in connection with the promotion, advertising, and marketing of products and services offered by the Restaurant for purchase in an amount equal to Twin Peaks’ cost in supplying such marketing materials.

8.  Additional Training; Retraining:  reasonable fee (currently $150 per day for each person providing the training), plus expenses

• Due Date:  Upon invoice.

9.  Inspection and Testing for Unapproved Suppliers, Products, or Equipment:  cost of inspection, if applicable, and cost of test

• Due Date:  Upon invoice.

• Before approving a new supplier, product, or equipment, Twin Peaks may require you to pay the cost of testing the supplier’s products and/or equipment and inspecting its facilities.

10.  Quality Assurance Inspections:  $450 to $500

• Due Date:  Upon invoice.

• If you receive a failing score on inspection, you will reimburse Twin Peaks for the cost of such inspection as well as the cost of a follow-up inspection to confirm quality deficiencies have been cured.

11.  Audits:  cost of audit, plus interest

• Due Date:  Upon invoice.

• You pay the cost of an audit only if it shows an understatement of your Gross Sales, Royalty Fees, or Brand Fund Contributions, or an understatement of 1.25% or more from data reported to Twin Peaks in respect to any other item that is material to the computation of fees or analysis of the operation.

12.  Improvements:  currently, up to $500,000 for improvements required during the initial term of the Franchise Agreement

• Due Date:  Upon invoice.

• Payable to Twin Peaks as reimbursement for any required improvements it makes to your Restaurant following your failure to make the improvements within the time period described in the Franchise Agreement.

13.  Transfer Fee:  $12,500

• Due Date:  Upon application for consent to transfer.

• Payable to Twin Peaks when you request its consent to transfer the franchise or your ownership.

14.  Successor Fee:  50% of the then-current initial franchise fee

• Due Date:  30 days before the end of the expiring term.

• Based upon the current initial franchise fee of $50,000, the successor fee is $25,000.

15.  Securities Offering Review:  $10,000

• Due Date:  Upon invoice.

• Payable if you engage in a public or private securities offering that includes a prospectus or offering memorandum that Twin Peaks reviews.

16.  Late Fee:  $150 for each delinquent report or payment

• Due Date:  Automatically upon next Electronic Transfer of Funds.

• You must pay this fee in addition to interest for any payment or report received by the franchisor after the prescribed due date.

17.  Interest:  18% per annum or maximum lawful rate

• Due Date:  On demand.

18.  Insurance:  premiums vary depending on location; currently, $45,000 to $70,000 for annual premiums

• Due Date:  When premiums are due.

• Twin Peaks has the right to obtain insurance for your Restaurant at your expense for premium, if you fail to purchase or renew your required insurance and provide proof of coverage to Twin Peaks.

19.  Indemnification:  varies depending upon claim and resolution of claim

• Due Date:  Upon billing.

• Payable if and when Twin Peaks defends a claim for which you indemnify it under the Franchise Agreement or Area Development Agreement (if applicable).

20.  Costs and Legal Fees:  actual legal fees and expenses

• Due Date:  Upon billing.

• Incurred only if a court determines that you have breached the Franchise Agreement or Area Development Agreement, if applicable.

• Legal fees and expenses will vary depending on factors such as the nature of the legal matter, venue, and the complexity of the legal matter.

21.  Liquidated Damages (Undeveloped Restaurants):  $50,000 per undeveloped Restaurant

• Due Date:  Upon demand.

22.  Liquidated Damages (Termination of Franchise Agreement):  (a) where there are less than two years remaining in the Term, the greater of (1) the average Royalty Fee paid by you per month during the previous two years of operation of the Restaurant multiplied by the number of months remaining in the Term and (2) $500,000; (b) where there are two or more years remaining in the Term and the Restaurant has operated for at least two years, the average Royalty Fee paid by you during the previous two years of operation of the Restaurant multiplied by 24 months; or (c) where there are two or more years remaining in the Term and the Restaurant has operated for less than two years, the average aggregate Royalty Fee paid by all Twin Peaks franchisees for the month that termination of the Franchise Agreement is effective, multiplied by 24 months

• Due Date:  Upon demand.