Detailed Information on PJ’s Coffee of New Orleans’ Initial Franchise Fee, Royalty Fee + 27 Other Fees (Items 5 and 6, 2022 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, and whether the Franchisee has entered into a Multiple-Unit Option Agreement (MUOA).

• The initial franchise fee is payable when Franchisee signs the Franchise Agreement. The initial franchise fee is fully earned and not refundable under any circumstances, 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.

• If you are an existing franchisee, who is compliant and in good standing, PJ’s may offer you the rights to acquire additional franchise licenses. Single unit franchisees may acquire an additional license for $25,000. Multi-unit franchisees may acquire an additional license for $15,000. A multi-unit franchisee is defined as a franchisee who has been granted the option to establish and operate multiple PJ’s Units. The initial franchise fee is not refundable under any circumstances.

• If you enter into a MUOA, the initial franchise fee for the first unit is $35,000, but the option fee for each PJ’s Unit numbered two or greater is $10,000 per option. All fees associated with the Franchise Agreement and the MUOA are due and paid upon the execution of said agreements. The initial franchise fee and option fees due under the MUOA are not refundable under any circumstances.

• 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 650 to 2,000 square feet):  $10,000 to $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

• PJ’s Coffee participates in the International Franchise Association’s VetFran program and offers a 20% discount on the Initial Franchise Fee to eligible PJ’s Franchisees. To be eligible for the Veteran Discount Program, you must be an active member or an honorably discharged veteran from the United States Armed Forces.

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.

• These fees are not refundable under any circumstances.

3.  Traditional Model Royalty Fee:  5.0% of net 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 net 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 net 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 (Marketing Fund):  2.0% of net sales

• Due Date:  Same as royalty fee.

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

7.  Non-Traditional Model Marketing Fee (Marketing Fund):  2.0% of net 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 (Marketing Fund):  no fee for this model

• Due Date:  Not applicable.

9.  Advertising Cooperatives:  1.0% up to 3.0% of net 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:  $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 net 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.  Renewal Fee:  $0

• Due Date:  Not applicable.

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

• Due Date:  As incurred.

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

18.  Returned Checks:  $30 for each occurrence

• Due Date:  As incurred.

• Payable to PJ’s.

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

• Due Date:  As incurred.

• Payable to proposed supplier.

20.  Point of Sale (POS) System Hardware Costs:  $1,000 to $2,500

• Due Date:  As incurred or monthly.

• Payable to approved vendor.

21.  Point of Sale (POS) Software License, Loyalty Program, and Gift Card Program Fee:  $215 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

22.  Labor Management Program Fee:  $20 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

23.  Mobile App Fee:  $50 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

24.  Inventory Management Program Fee:  $99 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

25.  QuickBooks Essentials:  $50 monthly fee

• Due Date:  Monthly.

• Payable to approved vendor.

26.  Liquidated Damages:  the average monthly Royalty and Marketing Fees during the preceding 12-month period multiplied by the lesser of the number of months remaining in the term of the Franchise Agreement or 36 months

• 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.

27.  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.

28.  Annual Convention Penalty:  $500

• Due Date:  As incurred.

• Payable to PJ’s.

29.  Financial Statement Penalty:  $100

• Due Date:  As incurred.

• Payable to PJ’s.