Considering a Pinot’s Palette Franchise? Don’t Overlook These 30 Important Franchise Fees

Updated February 5, 2020.

If you are considering a Pinot’s Palette franchise, don’t get blindsided by these 30 important franchise fees (from the initial franchise fee, to the royalty fee, to 28 other fees found in Items 5 and 6 of Pinot’s Palette’s 2019 FDD).

1.  Initial Franchise Fee:  $17,500 to $27,500

• When you sign the Franchise Agreement, you must pay Pinot’s Palette an initial franchise fee of $22,500 for a One Room Studio and an initial franchise fee of $27,500 for a Two Room Studio (the “Franchise Fee”).

• In the event you sign an Area Development Agreement to develop multiple Pinot’s Palette Studios or you simply choose to concurrently execute upfront two ore more Franchise Agreements to develop Pinot’s Palette Studios, the Franchise Fee for your second and subsequent One Room Studios will be $17,500, and the Franchise Fee for your second and subsequent Two Room Studios will be $22,500.

• Pinot’s Palette offers a discount of $350 for approved franchise candidates who sign a Franchise Agreement within the 30 days of being provided the Disclosure Document.

• Pinot’s Palette offers a discount to qualifying Veterans in the amount of 20% of the Franchise Fee to be rebated upon the signing of the lease for your Pinot’s Palette Studio.

2.  Mobile Studio Franchise Fee:  $2,500 to $7,500

• At your option, you may enter into an addendum to the Franchise Agreement which will grant you the right to operate a franchised Mobile Studio in connection with the franchised Studio at customer residences, places of business, or other suitable off-site venues.

• When you sign this addendum to the Franchise Agreement, yon must pay Pinot’s Palette a Mobile Studio Franchise Fee of $7,500.

• If you choose to sign the Franchise Agreement addendum to operate a franchised Mobile Studio at the same time as signing the Franchise Agreement to operate a Pinot’s Palette Studio, the Mobile Studio Franchise Fee will be reduced to $5,000.

3.  Area Development Fee:  $12,500 times the number of Studios to be developed

• If you are going to be an Area Developer, then you will sign an Area Development Agreement and pay Pinot’s Palette an area development fee (the “Area Development Fee”). The amount of the Area Development Fee will be calculated by multiplying $12,500 times the number of Studios to be developed under the Area Development Agreement.

4.  Opening Extension Fee:  $500 for a 1-month extension

• You may extend the deadline(s) by which you must develop and open the second and each subsequent Franchised Studio according to the Development Schedule under the Area Development Agreement by paying to Pinot’s Palette an Opening Extension Fee.

• The Opening Extension Fee is $500 for a 1-month extension. It is due on or before the last of the relevant opening deadline outlined in the Development Schedule.

• You may extend the opening deadline(s) for as many months as you wish; however, you must pay to Pinot’s Palette the $500 Opening Extension Fee for each month of extension.

• The Opening Extension Fee and related extension of the Development Schedule is not available for the first Franchised Studio to be developed and opened under the Area Development Agreement.

• If you fail to open any Franchised Studio by the relevant deadline(s) outlined in the Development Schedule, Pinot’s Palette may terminate the Area Development Agreement and retain the entire Area Development Fee and any Opening Extension Fee that you have paid without any refund to you.

5.  Other Initial Fees:  varies

• You must pay Pinot’s Palette an initial artist training fee of $500 per day, plus its actual costs of lodging, food, and travel arrangements for an artist trainer (the “Artist Training Fee”) estimated to range from between $600 to $1,500, for which it will provide such artist trainer who will conduct on-site initial artist training to all artists you have hired to perform classes for the franchised Studio.

• Currently, Pinot’s Palette’s initial artist trainers will conduct a minimum of 32 to 35 hours of training over a period of four or five consecutive days.

• Pinot’s Palette will provide one studio location layout to provide your local licensed architect. Should you request more than one studio location layout, Pinot’s Palette reserves the right to charge $400 for each additional layout.

• Prior to opening your Pinot’s Palette Studio, you must purchase all of the following items from Pinot’s Palette’s affiliate, PASS, or Pinot’s Palette’s approved suppliers: (1) branded material and apparel, marketing collateral, and gift certificates at a cost in the range of approximately $300 to $1,500 (these products may be purchased through a third party vendor which inventories such items on behalf of PASS); (2) certain furniture, fixtures, equipment, and supplies, including easels, tables, seating, frames, and canvases at a cost in the range of approximately $10,900 to $15,300; (3) Computer System at a cost in the range of approximately $2,300 to $4,800; and (4) audio/video equipment at a cost in the range of approximately $2,600 to $5,100.

6.  Royalty Fee:  6% of NAT Sales

• Due Date:  By the third business day after the close of each week based on the NAT Sales for that week.

• “NAT Sales” means all revenue related to the franchised Studio and franchised Mobile Studio (excluding any customer refunds, discounts on sales, and/or sales taxes collected from customers and actually transmitted to the appropriate taxing authorities).

7.  Marketing Obligations:  2% of NAT Sales to the System Marketing Fund

• Due Date:  Same as Royalty Fee.

• You must contribute this amount to the “System Marketing Fund,” which will be used to promote the Pinot’s Palette brand on a local, regional, and national basis.

• You must directly spend an additional amount of a minimum of $1,500 per month on your local advertising, which amount will be used toward contributions paid to any Cooperative Marketing Fund established in your area.

8.  Painting Rewards:  $5 per Master Painting Library or Testing Library painting used per class

• Due Date:  As incurred.

• Pinot’s Palette has established a system to encourage studios and artists to create works of art to be shared across the System. $5 per class is paid, through Pinot’s Palette, from your Studio to the originating studio each time you use a painting from the Master Painting Library and/or Testing Library.

• You may use paintings in your local library and your original paintings at no cost to you.

9.  Customer Service Center Fee:  currently, $250 initial set up fee and $1.95 per hour (35 hours per week) during the 1-year period following the lease signing of the Franchised Studio. After this period, the fee is scaled, depending on NAT Sales levels, as set forth in the Manuals.

• Due Date:  Same as Royalty Fee.

• During the 1-year period following the lease signing of the Franchised Studio, you must use Pinot’s Palette’s “Customer Service Center Program,” which is a customer service center that services customer calls with a national customer service line on behalf of franchisees, including answering telephone calls during core hours, registering customers for events, taking private party deposits, and providing basic studio information, among other services.

• After this 1-year period, you may continue to use the Customer Service Center Program at your option.

• For the 1-year period following lease signing, the current fee is $1.95 per hour (35 hours per week). For any period after this 1st year, you must pay Pinot’s Palette an hourly fee that is scaled depending on NAT Sales levels, as set forth in the Manuals.

• Customer Service Center Program services and pricing are subject to change in Pinot’s Palette’s sole discretion, and it may discontinue or modify the Customer Service Center Program at any time.

10.  Electronic Mail Account Fee:  currently, $54.78 per month; $20 per month for each optional additional electronic mail account

• Due Date:  The date the first Royalty Fee of each month is due.

11.  Additional On-Site Training and Assistance:  Pinot’s Palette’s per-diem charge (which is currently $500, plus its out-of-pocket costs), per trainer

• Due Date:  Upon demand.

12.  Technology Fee:  currently, $108 per month

• Due Date:  The date the first Royalty Fee of each month is due.

13.  Product and Services Purchases:  varies

• Due Date:  As incurred.

• You must purchase all of the following items from Pinot’s Palette’s affiliate, PASS, or other approved vendors: branded material and apparel, glassware, marketing collateral, gift certificates, easels, tables, seating, frames, canvases, point of sale computer system, and audio/video equipment, among other products and supplies.

14.  Local Telephone and Online Directories:  if Pinot’s Palette obtains such listings on your behalf, you must reimburse Pinot’s Palette an amount equal to the cost of obtaining listings in the online directories required under the Manuals for your franchised Studio

• Due Date:  Upon demand.

15.  Product/Supplier Testing:  an amount equal to the reasonable cost of the evaluation and testing of such products for approval

• Due Date:  Upon demand, if incurred.

16.  Transfer Fee:  an Area Developer will pay a transfer fee equal to $6,250 for each Pinot’s Palette Studio not developed, but not less than 50% of the Area Development Fee

• Due Date:  At time of transfer.

17.  Renewal Fee:  $2,500

• Due Date:  Before renewal.

18.  Charges for “Mystery Customer” Quality Control Evaluation:  an amount equal to the charges imposed by the “mystery customer” evaluation service provider for your franchised Studio, but not to exceed $500 per year

• Due Date:  Upon demand, if incurred.

19.  Late Fee and Interest on Overdue Payments:  a late fee equal to 5% of your overdue amount, and interest equal to 1.5% per month (but not more than any maximum rate set by law)

• Due Date:  At time the overdue payments are paid.

20.  Retreat Attendance Fee/Penalty:  the retreat attendance fee is currently $375 per person, however, this amount is subject to change. The penalty for not registering and attending the annual retreat is currently $500.

• Due Date:  Upon demand.

21.  Dues and Assessments Imposed by a Franchisee Advisory Council:  an amount determined by the franchisee advisory council (if established). Currently, none.

• Due Date:  At the times required by a franchisee advisory council.

22.  Gift Card Program:  an amount equal to the actual cost of the Gift Cards

• Due Date:  If incurred.

23.  Studio Refurbishment:  an amount equal to the actual costs to refurbish your franchised Studio, but not to exceed Pinot’s Palette’s then-current initial franchise fee

• Due Date:  As agreed.

24.  Prohibited Product, Service, or Unapproved Advertisement Fine:  $250 per day of use of unauthorized products, services, or unapproved advertisement

• Due Date:  If incurred.

25.  Audit Expenses:  an amount equal to the actual costs and expenses associated with the audit, including reasonable accounting and legal costs

• Due Date:  Upon demand.

26.  Insurance Procurement:  an amount equal to Pinot’s Palette’s actual cost to obtain insurance coverage for you if you fail to obtain the required insurance coverage under your Franchise Agreement

• Due Date:  Upon demand.

27.  Relocation Expenses:  an amount equal to Pinot’s Palette’s actual costs and expenses related to an approved relocation of your franchised Studio

• Due Date:  Upon demand.

28.  Securities Offering:  an amount equal to Pinot’s Palette’s reasonable costs and expenses (including legal and accounting fees) to evaluate your proposed offering

• Due Date:  Upon demand.

29.  Costs and Attorneys’ Fees:  an amount equal to Pinot’s Palette’s expenses incurred (including reasonable attorneys’ fees) as a result of your default and to enforce and terminate the Franchise Agreement

• Due Date:  Upon demand.

30.  Indemnification:  all amounts Pinot’s Palette is held liable for claims arising from your operation of the franchised Studio, as well as your use of the Proprietary Marks

• Due Date:  Upon demand.