Considering a Bombshells Restaurant & Bar Franchise? Don’t Overlook These 33 Important Franchise Fees

If you are considering a Bombshells Restaurant & Bar franchise, don’t get blindsided by these 33 important franchise fees (from the initial franchise fee, to the royalty fee, to 31 other fees found in Items 5 and 6 of Bombshells Restaurant & Bar’s 2018 FDD).

1.  Initial Franchise Fee:  $40,000

• You must pay Bombshells a non-refundable initial franchise fee of $50,000 when you sign the Franchise Agreement (less any development fee credit, as described below).

• If you are signing the Franchise Agreement under a Development Agreement, Bombshells will credit the pro rata portion of the development fee allocable to each Restaurant against the initial franchise fee due for that Restaurant.

• Bombshells offers a military discount to veterans who have a certified DD214 issued by the U.S. Department of Defense, as long as the qualifying veteran owns 25% or more of the franchisee entity or partnership.

• The discount is 20% off the initial franchise fee of $50,000 for the first Franchise Agreement entered into for the development of a new Restaurant.

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

• If you sign a Development Agreement, you must pay Bombshells a non-refundable development fee equal to the total of 100% of the initial franchise fee for the first Restaurant to be developed, plus 50% of the initial franchise fee for each additional Restaurant to be developed.

• As described above, the pro rata portion of the development fee allocable to each Restaurant will be credited against the initial franchise fee due for that Restaurant.

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

• For the opening of your first three Restaurants, Bombshells provides an Opening Training Team of its representatives to provide on-site pre-opening and opening training, supervision, and assistance to you for between 10 and 14 days, based upon its assessment of your needs in connection with the opening of your Restaurant.

• You must pay for the hourly wages, costs of travel, lodging, and Bombshells’ then-current per diem for each member of the Opening Training Team. Bombshells estimates that the costs for the Opening Training Team will range from $60,000 to $75,000.

• You must pay Bombshells a non-refundable deposit of $30,000 eight weeks before the scheduled Opening Date of the Restaurant; another $30,000 two weeks before the scheduled Opening Date of the Restaurant; and the balance of the Opening Training Team costs it incurs within 30 days after the Opening Date.

4.  Market Plan Fee:  $500

• Before Bombshells reviews the site you have selected, it will provide you a market plan report based upon its criteria for markets and sites. Before it provides you with the report, you will be required to pay it $500 for each market plan report it generates or has generated for you.

• Bombshells requires that at least one market plan report be developed for each site you submit for consideration. If you enter into a Development Agreement with Bombshells, it will also require that you pay for the number of market plan reports it requires for each Territory.

• The market plan fee is non-refundable.

5.  Architect Training Fee:  $5,000

• You may request approval of an architect who is not on Bombshell’s list of approved architects if the architect has developed plans and blueprints to build other full-service restaurants.

• If you use an architect that is not on Bombshell’s list of approved architects and is approved by Bombshells, Bombshells may require you or your architect to pay it a non-refundable $5,000 fee to train your architect.

6.  Audio/Visual Review Fee:  $700 to $1,000

• Bombshells may require that you pay it a non-refundable fee of $700 to $1,000 to review your audio/visual and technical components layout and plan (“A/V Plan”) if your A/V Plan provider and installer is not on Bombshells’ list of approved vendors.

• If, during Bombshells’ review of the A/V Plan, it determines that the provider you have selected does not meet its standards, it reserves the right to require you to select a different A/V Plan provider.

7.  Opening Extension Fee:  $5,000

• Bombshells may provide you an extension to open your Restaurant. If you wish to acquire a 30-day Opening Date extension, you must submit your request to Bombshells in writing no later than 45 days before the Opening Date deadline. If Bombshells grants your request for a 30-day extension, you must pay it $5,000.

• The extension fee will not be reduced on a pro rata basis and is non-refundable. You must follow the same process for any additional extensions you request, which Bombshells may or may not grant, in its sole discretion.

8.  Royalty Fee:  5.5% of Gross Sales

• Due Date:  On or before each Tuesday for the preceding Reporting Period.

• Bombshells requires you to pay the royalty fee by electronic funds transfer.

9.  Advertising Assessment (including Advertising Fund contribution and local advertising requirement):  up to 4.5% of Gross Sales; currently, 2.5% of Gross Sales for Advertising Fund contribution and 0.5% of Gross Sales for local advertising expenditures

• Due Date:  Advertising Fund contribution on or before each Tuesday for the preceding Reporting Period; payments for local advertising, when billed.

• Bombshells may require you to allocate differing amounts to local advertising (individually or through a cooperative) or to the Advertising Fund.

• Bombshells requires you to pay the Advertising Fund portion of the Advertising Assessment by electronic funds transfer.

10.  Software Program Fee:  currently, $300 per month

• Due Date:  When billed.

• Bombshells may require you to pay Bombshells, an affiliate, or a third-party provider to provide POS-related software.

11.  Internet Listing:  cost

• Due Date:  When billed.

• You must place and pay the cost of Internet listings as Bombshells requires.

12.  Technology Fee:  cost

• Due Date:  When billed.

• Bombshells may require you to pay it, an affiliate, or a third-party provider to provide technology-related services such as intranet, social media apps, and online ordering.

13.  Operations Software Fee:  cost

• Due Date:  When billed.

• Bombshells may require you to pay it, an affiliate, or a third-party provider for services and programs designed to provide you operations tools such as inventory management and training.

14.  Late Opening Fee:  $5,000 per extension

• Due Date:  On demand.

• Bombshells may provide you an extension to open your Restaurant. Each extension is for 30 days, and the full amount for each extension is charged if you need less than 30 days.

15.  Inspection and Testing:  cost of inspection, if applicable, and cost of test

• Due Date:  When billed.

• Before approving a supplier, Bombshells may require you to pay the cost of testing the supplier’s products and inspecting the supplier’s facilities (including Bombshells’ administrative expenses).

16.  Audit Fee:  cost and expenses of audit, plus interest

• Due Date:  When billed.

• Payable if an examination or audit shows you have understated any amount owed to Bombshells by 2% or more.

• The costs and expenses of the audit include, without limitation, reasonable accounting and attorneys’ fees and costs.

17.  Merchandise for Resale, Equipment, Decor Items:  cost

• Due Date:  On demand.

• Bombshells may provide to you, at its cost (including shipping), certain collateral merchandise for resale that identifies the System (for example, caps and t-shirts); equipment; decor items; and other products and services.

18.  Interest:  18% per year or the maximum lawful rate

• Due Date:  On demand.

• Bombshells may charge interest on all overdue amounts.

19.  Late Fee:  $200 for each delinquent report or payment

• Due Date:  On demand.

• Bombshells may charge a late fee for any delinquent amounts due under the Franchise Agreement.

20.  Additional Training:  at its option, then-current per diem rate; currently $250 per person; plus Bombshells’ costs of travel, lodging, and meals

• Due Date:  When billed.

• You must also pay the wages and expenses of your personnel attending training.

21.  On-site Remedial Training:  then-current per diem rate per person; currently $250 per person; plus Bombshells’ costs of travel, lodging, and meals

• Due Date:  When billed.

• If you ask or if Bombshells believes it is appropriate, it will (subject to availability) provide trained representatives to conduct on-site remedial training at your Restaurant.

22.  Replacement Training:  $2,500 per trainee

• Due Date:  On demand.

• You must also pay the wages and expenses of your personnel attending training in Houston.

23.  Transfer Fee – Franchise Agreement: $12,500; Development Agreement: $12,500

• Due Date:  Upon application for consent to transfer.

• If an individual or partnership transfers rights to a corporation controlled by the same interest holders, the transfer fee is limited to reimbursement of Bombshells’ out-of-pocket costs.

24.  Renewal Fee:  50% of the then-current initial franchise fee

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

• The current initial franchisee fee is $50,000

25.  Securities Offering Fee:  Bombshells’ reasonable costs and expenses associated with the proposed offering

• Due Date:  When billed.

• Bombshells limits its review to the manner in which the offering materials treat its relationship with you.

26.  Indemnification:  varies according to loss

• Due Date:  On demand.

• You must indemnify Bombshells when certain of your actions result in loss to it.

27.  Insurance Fee:  a reasonable amount based on Bombshells’ expenses

• Due Date:  On demand.

• If you fail to maintain the required insurance, Bombshells may (but need not) obtain it for you. If Bombshells does, it will charge you a fee, plus its expenses.

28.  Marketing Material:  reasonable fee

• Due Date:  When billed.

• Bombshells may require you to purchase certain marketing material from it for a reasonable fee, which will vary depending on the type and quantity of material.

29.  Mystery Shopper:  amount of receipt; currently, $80-$120 per visit

• Due Date:  When billed.

• You will be required to pay for two mystery shops per month. Bombshells reserves the right to conduct additional mystery shops if you fail an evaluation or if it receives a specific customer complaint about your Restaurant.

30.  Liquidated Damages for Undeveloped Restaurants:  $50,000 per undeveloped Restaurant

• Due Date:  Upon demand.

• If you fail to develop any Restaurants required to be developed under a Development Agreement, you must pay Bombshells $50,000 as liquidated damages, plus the second half of the franchise fee.

31.  Liquidated Damages – Violation of Employee Non-Solicitation Obligation:  50% of then-current annual compensation of employee solicited or employed

• Due Date:  Upon demand.

• If you employ or seek to employ any person who is at the time, or was at any time during the prior 12 months, employed in any type of managerial position by Bombshells or any of its affiliates, or by any franchisee in the Bombshells Restaurant system, you must pay liquidated damages to Bombshells or the affected franchisee, as applicable.

32.  Loss of Liquor License:  will vary

• Due Date:  As incurred.

• If your liquor license is suspended or revoked, Bombshells reserves the right to charge you the royalty fee on the Gross Sales you would have received had your liquor license not been suspended or revoked.

33.  Enforcement Costs:  will vary

• Due Date:  As incurred.

• You must pay Bombshells’ costs of enforcement (including attorneys’ fees and costs) if you do not comply with the Franchise Agreement or the Development Agreement.