Considering a PJ’s Coffee of New Orleans Franchise? Don’t Overlook These 27 Important Franchise Fees

Updated August 2, 2020.

If you are considering a PJ’s Coffee of New Orleans franchise, don’t get blindsided by these 27 important franchise fees (from the initial franchise fee, to the royalty fee, to 25 other fees found in Items 5 and 6 of PJ’s Coffee of New Orleans’ 2020 FDD).

1.  Initial Franchise Fee:  $10,000 to $35,000

• The initial franchise fee can range from $10,000 to $35,000 depending on the type of model chosen.

• The initial franchise fee is payable when Franchisee signs the Franchise Agreement. The initial franchise fee is fully earned and non-refundable when paid, in consideration of the administrative and other expenses incurred by Franchisor entering into the Franchise Agreement, and for Franchisor’s lost or deferred opportunity to enter into the Franchise Agreement with others.

• The initial franchise fee is based on the type of model chosen. Please review the information below to determine Franchisee’s initial franchise fee:

• Traditional Model (Traditional Units generally range between 1,000 to 1,850 square feet):  $35,000

• Non-Traditional Model (Non-Traditional Units generally range between 250 to 1,000 square feet and may feature a common eating area and/or possibly a common kitchen, i.e. airports, shopping malls, sports arenas, hotels, university campuses, health care facilities, government, and military facilities. Non-Traditional Units generally feature a condensed food and beverage menu):  $25,000

• Special Contracts Traditional Model:  $10,000 to $15,000

• Special Contracts Non-Traditional Model:  $10,000 to $15,000

2.  Pre-Opening Purchases:  $2,500 to $5,000

• Before opening for business, Franchisee must purchase the necessary PJ’s Products and proprietary items from Franchisor and/or Franchisor’s affiliate, New Orleans Roast, LLC.

• Franchisor estimates that Franchisee’s pre-opening costs for PJ’s Products and proprietary items purchased from it and/or its affiliate will range from $2,500 to $5,000 per Unit.

3.  Traditional Model Royalty Fee:  5.0% of gross sales

• Due Date:  Automatically withdrawn five business days after prior week’s end.

• Payable to PJ’s; uniformly imposed; non-refundable.

4.  Non-Traditional Model Royalty Fee:  5.0% of gross sales

• Due Date:  Automatically withdrawn five business days after prior week’s end.

• Payable to PJ’s; uniformly imposed; non-refundable.

5.  Special Contracts Traditional Model/Special Contracts Non-Traditional Model Royalty Fee:  3.0% to 6.0% of gross sales (depending on Franchisee experience). Generally, a Franchisee with more experience operating other PJ’s Franchise Units or similar types of units within other systems will have a lower rate than Franchisees with less experience either in terms of time or with this particularly type of business. The Royalty Fee will be determined prior to the Franchisee signing the Franchise Agreement.

• Due Date:  Automatically withdrawn five business days after prior week’s end.

• Payable to PJ’s; uniformly imposed; non-refundable.

6.  Traditional Model Marketing Fee (System Fund):  2.0% of gross sales

• Due Date:  Same as royalty fee.

• Payable to PJ’s; uniformly imposed; non-refundable.

7.  Non-Traditional Model Marketing Fee (System Fund):  2.0% of gross sales

• Due Date:  Same as royalty fee.

• Payable to PJ’s; uniformly imposed; non-refundable.

8.  Special Contracts Traditional Model/Special Contracts Non-Traditional Model Marketing Fee (System Fund):  no fee for this model

• Due Date:  Not applicable.

9.  Advertising Cooperatives:  1.0% up to 3.0% of gross sales

• Due Date:  Established by cooperative.

• As designated by Franchisee’s cooperative.

10.  Interest on Late Payments:  prime, plus 2.5% per annum or the maximum rate allowed by the applicable federal and/or state law

• Due Date:  Immediately.

• Payable to PJ’s; non-refundable.

11.  Training Fees:  no fee charged for initial training programs. After first training program, additional training sessions may either be requested by Franchisee or mandated by PJ’s.

• Due Date:  Additional training programs – as incurred before commencement of program.

• Additional training programs – payable to PJ’s.

12.  Initial Advertising Fee:  $7,500 to $10,000

• Due Date:  Prior to opening.

• Payable to approved vendor.

13.  Refurbishment Costs:  $20,000 to $65,000

• Due Date:  After the first five years of opening of the Unit.

• Payable to approved contractor/vendor.

14.  Audit Fees:  $2,500 to $8,000

• Due Date:  After audit and gross sales are determined to be understated by 5% or more.

• To designated auditor.

15.  Transfer Fees:  $15,000

• Due Date:  Payable at time of transfer.

• Payable to PJ’s when, and if, Franchisee transfers Franchisee’s franchise; uniformly imposed; non-refundable.

16.  Renovation/Design Construction Plans:  $1,500 to $11,500

• Due Date:  As incurred.

• Payable to PJ’s and/or approved/designated architecture firm.

17.  Returned Checks:  $30 for each occurrence

• Due Date:  As incurred.

• Payable to PJ’s.

18.  Charge for Inspection and Testing of Proposed Suppliers:  $0 to $1,000

• Due Date:  As incurred.

• Payable to proposed supplier.

19.  Point of Sale (POS) System Costs:  $1,000 to $2,000 if paid in full. Alternatively, Franchisee may elect to pay $40 to $80 per month for 24 months in lieu of paying in full for the POS System.

• Due Date:  As incurred or monthly.

• Payable to approved vendor.

20.  Point of Sale (POS) Software License, Loyalty Program, and Gift Card Program Fee:  $300 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

21.  Labor Management Program Fee:  $30 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

22.  Mobile App Fee:  $175 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

23.  Inventory Management Program Fee:  $100 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

24.  Early Termination Fee:  the average monthly Royalty and Marketing Fees during the preceding 12-month period multiplied by the number of months remaining in the term of the Franchise Agreement

• Due Date:  As incurred – 30 days prior to the early closing of the store.

• Franchisee must provide PJ’s with 90 days’ written notice of the termination of Franchisee’s Franchise Agreement.

25.  Annual Convention:  $500 to $5,000

• Due Date:  As incurred – yearly.

• This includes the registration fee, cost of travel, and lodging. It does not take into account miscellaneous expenses such as food and entertainment.

• Travel expenses may vary depending on your point of origin.

26.  Annual Convention Penalty:  $500

• Due Date:  As incurred.

• Payable to PJ’s.

27.  Financial Statement Penalty:  $100

• Due Date:  As incurred.

• Payable to PJ’s.