Considering a Precision Tune Auto Care Franchise? Don’t Overlook These 20 Important Franchise Fees

If you are considering a Precision Tune Auto Care franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Precision Tune Auto Care’s 2017 FDD).

1.  Initial Franchise Fee:  $10,000 to $25,000

• The initial franchise fee is $25,000 ($10,000 if you qualify for Precision Tune’s VetFran Program) unless you qualify for a discount under the following incentive program for multiple-unit franchisees:

• $15,000 for a second Precision Tune Auto Care franchise, provided that you must have owned and operated 1 Precision Tune Auto Care franchise for at least 12 months.

• $10,000 for a third and subsequent Precision Tune Auto Care franchise, provided that you have owned and operated at least 1 Precision Tune Auto Care franchise for at least 12 months.

• Under the site development addendum to the Franchise Agreement, if you cannot, after diligent effort, find an acceptable site and elect to cancel within 180 days after you sign the Franchise Agreement, you will receive a refund of 20% off the initial franchise fee, if you are not in default of the Franchise Agreement or any other agreement between Precision Tune and you.

• If you convert an existing, operational automotive repair facility to a Precision Tune Auto Care Center, at its option, Precision Tune may waive the initial franchise fee in whole or in part, or it may reimburse certain costs associated with making the conversion.

2.  Software License:  see below

• Precision Tune offers to you the option to use the proprietary SoftWrench point-of-sale software program in connection with your operation of the Center. Should you decide to use this software, you must pay to Precision Tune a one-time license fee of $200, a fee for a license of Sybase software (currently $320, but subject to change from time to time) as part of the software, and quarterly support fees of $195 for so long as you use the SoftWrench software in your center.

• For franchisees that acquire Softwrench software from Precision Tune in connection with establishing a new franchise, Precision Tune will pay on your behalf the $200 initial fee and 7 months ($455) of the software support fee.

3.  Operating Fee:  6.0%-7.5% of Gross Sales, subject to $300/week minimum

• Due Date:  Payable weekly.

• You must pay these fees by electronic funds transfer or by other means Precision Tune designates in writing.

4.  National Marketing Fund:  1.5% of Gross Sales

• Due Date:  Payable weekly.

• Precision Tune administers a national marketing and promotional fund.

• You must pay these fees by electronic funds transfer or by other means Precision Tune designates in writing.

5.  Local/Co-operative Marketing:  up to 7.5% of Gross Sales

• Due Date:  Payable weekly.

• Precision Tune may require you to participate in a marketing cooperative with other Centers.

• Typically, the co-op by-laws provide that each Center in the co-op has 1 vote per center.

• These fees are payable directly to the local marketing co-operative and may be withdrawn by electronic funds transfer.

6.  New Center Marketing:  $3,000

• Due Date:  4-week period before and 4-week period after opening.

• Minimum amount you must spend for opening marketing and promotion.

7.  On-Site and Local Area Training:  currently $500 per day per trainer, plus travel, lodging, and meal expenses

• Due Date:  Due on receipt of invoice.

• Payable only if you request training at your Center.

8.  Equipment, Supply, or Supplier Testing or Inspecting:  fee not to exceed the actual costs of inspecting and testing

• Due Date:  Due on receipt of invoice.

• This fee covers the cost of testing or inspecting equipment, supplies, or suppliers you propose.

9.  Ongoing Training Manuals:  $10 to $245, depending on the manual

• Due Date:  Due on receipt of invoice.

10.  Transfer:  (a) $2,000 if transferred to an experienced manager or Precision Tune Auto Care franchisee; (b) $10,000, if transferred to any other person

• Due Date:  Before transfer.

• Payable if you transfer your interest in the franchise; no charge for 1st transfer to corporation that you control.

11.  Renewal:  $2,000

• Due Date:  On or prior to effective date of renewal.

12.  Audit:  cost of audit (estimated at $6,000 to $10,000)

• Due Date:  Due on receipt of invoice.

• Payable only if Precision Tune finds, after an audit, that you have understated or underpaid any amount owed to it by 3% or more.

13.  Late Reporting Fees:  $100 per week until you submit the weekly sales report

• Due Date:  Weekly sales reports are late if Precision Tune does not receive them by the due date.

• Payable only if you do not submit your weekly sales reports by the due date.

14.  Late Payment Fees:  18% per year, or highest rate of interest allowed by applicable law; bank service charges; administrative fees

• Due Date:  Weekly payments are late if Precision Tune does not receive them by the due date.

• Payable only if you do not pay your fees by the due date.

15.  Attorneys’ Fees and Costs:  will vary under circumstances

• Due Date:  As incurred.

• Payable to Precision Tune if it is forced to retain independent counsel and seek damages or injunctive relief to enforce the Franchise Agreement (whether or not suit is filed) or if Precision Tune is required to defend your unsuccessful claim against it.

• Includes legal fees incurred at the trial level and appellate levels.

16.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Precision Tune (and its area developer, if any) if it is held liable for claims arising from the operation of your franchised business.

17.  Site Evaluation:  first site evaluation free; for all others, reimbursement of Precision Tune’s expenses ($500 minimum)

• Due Date:  On receipt of invoice.

• Payable only if you request that Precision Tune evaluate more than 1 site for you.

18.  Securities Offering:  $5,000

• Due Date:  On receipt of invoice.

• Payable only if you engage in a public or private offering of securities.

19.  Future Lost Profits:  number of weeks remaining under the Franchise Agreement multiplied by the greater of: $300 or 7.5% of average Gross Sales for the preceding 26 weeks of reported gross sales

• Due Date:  On termination.

• Payable only if you terminate the Franchise Agreement wrongfully, or if Precision Tune terminates the Franchise Agreement due to your material, uncured breach(es) (subject to state law).

• Future lost profits will be discounted by 20% to determine its present value.

20.  POS Hardware and Software:  depends upon vendor and products purchased

• Due Date:  Depends upon vendor and products purchased.

• Precision Tune has approved 2 different POS Software Systems.