If you are considering a Robeks franchise, don’t get blindsided by these 26 important franchise fees (from the initial franchise fee, to the royalty fee, to 24 other fees found in Items 5 and 6 of Robeks’ 2018 FDD).

1.  Initial Franchise Fee:  $12,000 to $30,000

• All Initial Franchise Fees are fully earned upon receipt and are not refundable.

• The standard Initial Franchise Fee is $30,000 and is payable in full upon the execution of the Franchise Agreement.

• Existing franchisees acquiring additional franchises will pay a reduced Initial Franchise Fee of $15,000 for each additional Franchise Agreement.

• Regional Directors also pay $15,000 for the Initial Franchise Fee for Stores they open on their own account.

• You sign a separate Franchise Agreement for each franchise that you buy. If you buy three franchises (a “Three-Pack”) at the same time, you pay combined Initial Franchise Fees of $54,000 for all three Stores ($30,000 for the first Franchise Agreement and $12,000 for each of the second and third Franchise Agreements), which are fully earned upon receipt and are not refundable.

• To qualify for this discounted pricing, all franchises must be new franchises, not transfers or sales by an existing franchisee of an operating Robeks Store, and you must meet Robeks’ then-current eligibility standards for growth.

• If you buy an additional Robeks Store franchise at a later date, Robeks will discount its then-current Initial Franchise Fee by 50%. For example, if Robeks’ current Initial Franchise Fee is $30,000 when you buy a second franchise, you would pay $15,000 as the Initial Franchise Fee for your second Robeks Store franchise.

• Robeks has instituted an incentive program for Veterans. Veterans pay a reduced Initial Franchise Fee of 50% of the current Franchise Fee.

2.  Development Fee:  $8,000 to $10,000 per Robeks Store you agree to develop in the Territory

• If you are an Area Developer, you must pay Robeks a nonrefundable Development Fee as follows: (i) for the first five Stores you agree to develop in the Territory, the total Development Fee will be $10,000 multiplied by the number of Robeks Stores you will develop (up to five), plus (ii) for any Stores you agree to develop in excess of the initial five Stores, the total Development Fee will be $8,000 multiplied by such number of additional Stores.

• The Development Fee is due when you sign the Area Development Agreement. You must sign a separate Franchise Agreement (the then-current form of Franchise Agreement) for each Robeks Store you open.

• In addition to the Development Fee, you will pay an Initial Franchise Fee for each Store when you sign a Franchise Agreement for that Store. However, under an Area Development Agreement, the amount of your Initial Franchisee Fee is reduced on a sliding scale as illustrated by the following chart, which shows the calculation of the Development Fee and the Initial Franchise Fee per Store:

• 1st Store:  $10,000 Development Fee; $20,000 Initial Franchise Fee; $30,000 Total Store Fee
• 2nd Store:  $10,000 Development Fee; $12,500 Initial Franchise Fee; $22,500 Total Store Fee
• 3rd Store:  $10,000 Development Fee; $8,000 Initial Franchise Fee; $18,000 Total Store Fee
• 4th Store:  $10,000 Development Fee; $8,000 Initial Franchise Fee; $18,000 Total Store Fee
• 5th Store:  $10,000 Development Fee; $8,000 Initial Franchise Fee; $18,000 Total Store Fee
• 6th or More Store:  $8,000 Development Fee; $10,000 Initial Franchise Fee; $18,000 Total Store Fee

3.  Royalty Fee:  6% to 7% of Net Sales depending on number of Stores you operate

• Due Date:  Robeks requires payment by automatic debit (“ACH”) on the date payment is due (within 10 days of the end of then-applicable accounting period).

4.  Advertising Fees:  2.5% of Net Sales

• Due Date:  Payable together with and for the same period as the Royalty Fee.

• Advertising Fees are paid to the Marketing Fund.

5.  Local Advertising Expenditures:  2.5% of Net Sales

• Due Date:  Periodically for franchisee’s local advertising.

6.  Audit Cost:  cost of audit, plus full amount of any underpayment and interest and late charges

• Due Date:  When Robeks completes audit.

• Payable only if Robeks’ audit shows an understatement of Net Sales of 2% or more for any period.

7.  Returned ACH:  1st returned ACH – $10 per returned item; 2nd through 4th returned ACH – $25 per returned item; 5th or more returned ACHs – $50 per returned item

• Due Date:  Automatically imposed on next regularly scheduled ACH.

• Applies to all ACHs in a calendar year. If Robeks is unable to resolve the ACH within 5 business days after the ACH is returned, late charges and interest as described below will also be applied.

8.  Late or Non-Submission of Required Profit and Loss Statements or Other Reports:  1st late or non-submission – $50; 2nd late/non-submission – $75; 3rd or any subsequent late/non-submission – $100

• Due Date:  Automatically imposed on next regularly scheduled ACH.

• Applies to required periodic profit and loss statements and other reports.

9.  Late or Non-Submission of Construction Costs:  $50 per month until submitted

• Due Date:  Automatically imposed on next regularly scheduled ACH.

• Construction costs are all costs associated with the opening of the Store.

10.  Fines:  ranging from $30 to $500 per occurrence

• Due Date:  Automatically imposed on the next scheduled ACH.

11.  Late Charge and Interest:  late charge: $200 per late payment; interest: 1.5% per month not to exceed the maximum legal rate of interest

• Due Date:  Automatically imposed upon payment.

• Interest accrues immediately after due date if you fail to pay full obligation.

• Applies to all amounts owed to Robeks.

• Interest is payable on the entire overdue amount beginning with the date payment is due until you pay the overdue amount, late charge, and interest in full.

• Interest accrues on the late charge if you do not pay the amount due, including late charge, within 10 days after due date.

12.  Remedial Work to Correct Unhealthy or Unsafe Condition:  Robeks’ actual costs for remedial or corrective work, including labor, materials, travel, supervision, and subcontractors, plus a service charge equal to 25% of the cost of the remedial or corrective work

• Due Date:  Upon receipt of invoice.

• Robeks has no obligation to perform remedial work and may exercise its right to terminate the Franchise Agreement because of your breach.

13.  Insurance:  Robeks’ actual costs of new required insurance for the period of coverage, plus a service charge equal to 25% of the cost of new required insurance for the period of coverage. Annual insurance premiums range from $2,200 to $5,000 or more for general liability and $2,100 and $10,000 or more for workers’ compensation.

• Due Date:  When premiums are due.

• A service charge of 25% of the annual cost of new insurance is payable to Robeks if you fail to carry the insurance it requires and if it purchases the insurance for you (although Robeks is not obligated to do so).

14.  Renewal Fee (Franchise Agreement):  Franchise Agreement: 25% of Robeks’ then-current Initial Franchise Fee at the time you renew

• Due Date:  When you give notice of your intent to renew.

15.  Transfer Fee (Franchise Agreement, Area Development Agreement):  Franchise Agreement: $10,000 (or $5,000 if transferee is an existing franchisee), nonrefundable; Area Development Agreement: $25,000, non-refundable, in addition to transfer fees under individual Franchise Agreements

• Due Date:  When you apply for Robeks’ consent to a proposed transfer.

• The Franchise Agreement and the Area Development Agreement define what events constitute a “transfer.” A transfer to an entity controlled by you may qualify for a lower transfer fee.

16.  Training:  the initial training is included in the Initial Franchise Fee. Costs for additional training will vary under the circumstances.

• Due Date:  Before training begins.

• You must pay all travel and living expenses while attending any training program.

17.  Indemnification and Defense:  all costs including attorneys’ fees; amount will vary under circumstances

• Due Date:  As Robeks incurs expenses and presents them to you.

• You must reimburse Robeks for losses that it suffers resulting from the operation of your business.

• Robeks may retain its own legal counsel. You must reimburse Robeks for its legal and other professional expenses in connection with the claim.

18.  Alternate Supplier Testing Fee:  based on Robeks’ actual cost

• Due Date:  When you request approval of an alternate supplier.

• Payable by ACH.

19.  Monthly Financial Report Deviation Fee:  maximum $50 per hour

• Due Date:  As incurred.

20.  Extra Operational and Marketing Support (including visits to cure operational issues):  reimbursement of reasonable actual expenses (no fee)

• Due Date:  As incurred.

• Payable by ACH.

21.  Point-of-Sale (“POS”) System Help Desk Fees and Software License Fees:  up to $200 per month for a standard two-terminal system. Fees may vary. Price may increase if additional terminals are required.

• Due Date:  Paid monthly to Robeks.

• The POS System Help Desk vendor bills Robeks directly and it ACH you for that same amount.

22.  Non-POS Related Miscellaneous Computer Technical Support:  $75 to $200 per hour, subject to service minimums (generally 2 hours) which may vary depending on geographic location of Store

• Due Date:  As Robeks incurs expenses and presents them to you.

• Payable by ACH.

23.  Inspection Reimbursement:  Robeks’ costs and expenses in connection with each inspection of your Robeks Store but not less than $100 per inspection. Payable only if you receive a failing score during the inspection.

• Due Date:  Upon demand.

• Payable by ACH.

24.  Reimbursement for Refunds and Adjustments Robeks Pays to Resolve Customer Complaints Relating to Goods or Services You Provide:  the amount Robeks pays to customers to resolve complaints

• Due Date:  Upon demand.

• Payable by ACH.

25.  Fines for Violations Under the Franchise Agreement or Manual:  up to $500 per instance

• Due Date:  Upon demand.

• Payable by ACH.

26.  Conventions or Franchisee Meetings:  if Robeks holds an annual or semiannual meeting for franchisees (whether national or regional), attendance is mandatory. Robeks may charge a registration fee to recoup its costs. If Robeks holds a meeting and you do not attend, it may assess a fine of
up to $500.

• Due Date:  Upon demand.

• Payable by ACH.