If you are considering a Mister Sparky franchise, don’t get blindsided by these 17 important franchise fees (from the initial franchise fee, to the royalty fee, to 15 other fees found in Items 5 and 6 of Mister Sparky’s 2018 FDD).
1. Standard Initial Fees: $33,000 for a territory that has a minimum population of 200,000, plus $165 for each 1,000 of population above 200,000
- The minimum initial fees (“Initial Fees”) for both Conversion Franchises and Start-Up Franchises are $33,000 for a territory that has a minimum population of 200,000, plus $165 for each 1,000 of population above 200,000. The population in a territory is generally approximately 200,000.
- The Initial Fees must be paid in a lump sum or, for qualifying franchisees, may be financed in installment payments. The Initial Fees will be fully earned by Mister Sparky upon signing of the Franchise Agreement and are not refundable under any circumstances.
- Initial Fees paid may not be uniform. Mister Sparky may vary, reduce, negotiate, or make an exception to its standard Initial Fees structure and/or payment terms in order to facilitate mergers, conversions, or other large transactions, as well as to accommodate certain existing franchisees that acquire additional locations.
- Mister Sparky is a member of the International Franchise Association (“IFA”) and participates in the IFA’s VetFran Program which provides special financial incentives to qualified veterans. Pursuant to this program, Mister Sparky offers a 10% discount on the initial franchise fee for all honorably discharged veterans of American and Canadian armed forces for your first franchise only.
2. SuccessWare: $325 to $525 per month and the first month’s payment
- SuccessWare is a software package that Mister Sparky currently requires for its franchises. The initial activation fee is included in your Initial Fees.
- SuccessWare will cost you $325 to $525 per month and the first month’s payment of $325 to $525 is usually paid before opening for business and the payment is non-refundable.
3. SuccessWare Training: $1,795 for one to two people
- You must also pay for SuccessWare training courses at $1,795 for one to two people, which is usually paid before opening for business and the payment is non-refundable.
- For each training course you pay for, a second person may attend the same training course at no additional charge by SuccessWare.
- SuccessWare estimates you will have to pay $1,795 to $3,590 for SuccessWare training courses, depending on the number of people that attend the SuccessWare training course and whether they share a computer terminal.
- This amount is paid usually before opening for business and is non-refundable.
4. Development Fee: $10,000 multiplied by the number of Franchised Businesses to be developed pursuant to the Development Schedule
- When you sign an Area Development Agreement, you must pay Mister Sparky a lump-sum, non-refundable development fee equal to $10,000 multiplied by the number of Franchised Businesses to be developed pursuant to the Development Schedule (“Development Fee”).
- The Initial Fees for each Franchised Business developed pursuant to the Development Schedule will be reduced to $2,000, and the $2,000 Initial Fee will be owed at the time you sign each Franchise Agreement pursuant to the Development Schedule.
- The Development Fee may not be uniform for all area developers entering into an Area Development Agreement under this offering depending on the geographic area and other factors.
- Unless otherwise provided by state law in your jurisdiction, the Development Fee will be fully earned by Mister Sparky upon signing the Area Development Agreement and is not refundable under any circumstances.
5. Continuing Franchise Fees (Conversion and Start-Up Franchisees): 5% of Net Sales. The minimum Continuing Franchise Fee is $1,500 per month.
- Due Date: Payable semi-monthly beginning on the 1st day of the month following 90 days after the effective date of your Franchise Agreement.
- Payments are due by the 25th day of each month for Net Sales from sales from the 1st day through the 15th day of that month, and by the 10th day of each month for Net Sales from sales from the 16th day through the last day of the previous month.
- Payable to Mister Sparky.
- Continuing Franchise Fees can be raised (to a maximum of 10%) by Mister Sparky during periods when you are not in compliance with all terms of the Franchise Agreement.
6. Software Fees: range of $325 to $525
- Due Date: Payable monthly.
- Payable to SuccessWare and vendor.
7. Marketing Fund Contributions: as designated by Mister Sparky, but not to exceed 4% of Net Sales. Initial contribution level set at 3% of Net Sales per month per franchise.
- Due Date: Payable semi-monthly 90 days after the effective date of your Franchise Agreement.
- Payments are due by the 25th day of each month for Net Sales from sales from the 1st day through the 15th day of that month, and by the 10th day of each month for Net Sales from sales from the 16th day through the last day of the previous month.
- Payable to Mister Sparky.
8. Additional Training: currently $1,000 per day per person, plus the trainer’s travel and living expenses
- Due Date: When invoice received.
- Payable to Mister Sparky.
9. Audit Costs: if an audit reveals a discrepancy of more than 3% in the underpayment of any fee, you must reimburse all of Mister Sparky’s expenses for the audit. Mister Sparky estimates the range of audit costs to be from $5,000 to $10,000.
- Due Date: As incurred.
- Payable to Mister Sparky.
10. Transfer Fee: $10,000
- Due Date: Half of the fee is due upon proposal of the Transfer, the remaining half of the fee is due when the Transfer is completed.
- Payable to Mister Sparky.
11. Renewal Fee: $10,000
- Due Date: Upon renewal.
- Payable to Mister Sparky.
12. Indemnification: amount of claims
- Due Date: As incurred.
- Payable to Mister Sparky or other Indemnified Parties.
13. Past Due Service Charge: 1.5% per month or maximum permissible rate
- Due Date: Upon receipt of a demand for payment.
- Payable to Mister Sparky.
14. Supplier Evaluation Fee: you must reimburse Mister Sparky for its direct reasonable expenses incurred in inspecting the supplier’s facilities
- Due Date: Upon receipt of a request for payment.
- Payable to Mister Sparky.
15. Past Due De-Identification Charge: $500 per vehicle, per day, for each day your vehicle(s) continue to display Mister Sparky’s colors and other trademarks after the five-day de-identification period that begins with the termination or expiration of the Franchise Agreement
- Due Date: Upon receipt of a demand for payment.
- Payable to Mister Sparky.
Area Developers
16. Transfer Fee: $10,000
- Due Date: Half of the fee is due upon proposal of the Transfer, the remaining half of the fee is due when the Transfer is completed.
- Payable to Mister Sparky.
17. Indemnification: amount of claims
- Due Date: As incurred.
- Payable to Mister Sparky or other Indemnified Parties.
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