Considering an Xpresso Delight Franchise? Don’t Overlook These 19 Important Franchise Fees

Updated September 26, 2019.

If you are considering an Xpresso Delight franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Xpresso Delight’s 2019 FDD).

1.  Initial Franchise Fee:  $37,500

• When you sign the Franchise Agreement, you must pay to Xpresso Delight an initial lump sum amount of $37,500 as an initial fee (“Franchise Fee”). The Franchise Fee is earned upon receipt and not refundable under any circumstances for administrative and other expenses incurred by Xpresso Delight in granting the franchise and for its lost or deferred opportunity to franchise to others.

• Other than as discussed above and regarding the costs of the Xpresso Delight Beverage Systems and the payment of the Development Fee below, the initial fees are uniformly imposed on new franchisees signing Franchise Agreements.

2.  Xpresso Delight Beverage Systems:  $25,000

• When you sign a Franchise Agreement, you must purchase from Xpresso Delight at least five Xpresso Delight Beverage Systems at an estimated cost of $5,000 per system (estimated total of $25,000). The actual cost of each Xpresso Delight Beverage System may vary depending on price changes by Xpresso Delight’s equipment sources, and delivery and shipping charges.

• The amount paid for the Xpresso Delight Beverage Systems is earned upon receipt and is not refundable under any circumstances.

3.  Development Fee:  varies (typically from $100,000 for three Franchise Agreements to $150,000 for five Franchise Agreements)

• When you sign the Development Agreement, you must pay a “Development Fee,” which depends on the number of Franchise Agreements you agree to sign. The typical Development Fee ranges from $100,000 for the right to sign three Franchise Agreements (and establish and operate three Franchise Businesses) to $150,000 for the right to sign five Franchise Agreements (and establish and operate five Franchise Businesses).

• You receive a discount on the amount of the Franchise Fee for the second and each subsequent Franchise Agreement you sign. For example, if you pay $100,000 for the right to sign three Franchise Agreements, the Franchise Fee under your first Franchise Agreement is the full Franchise Fee of $37,500, the Franchise Fee under the second Franchise Agreement is $32,500, and the Franchise Fee under the third Franchise Agreement is $30,000.

• Under a Development Agreement, you will not pay a separate Franchise Fee for the Franchise Businesses to be developed under the Development Agreement. Instead, Xpresso Delight will credit your Development Fee payment towards the Franchise Fee due under each Franchise Agreement when you sign each Franchise Agreement.

• The Development Fee is earned upon receipt and Xpresso Delight has no obligation to refund the Development Fee.

4.  Royalty Support Fee:  $0.11 to $0.15 per cup distributed through any machine operating under the Xpresso Delight Marks, based on the volume of Cups Per 4-Week Billing Cycle (“CP4W”) dispensed across all units in service

• Due Date:  As collected.

• Xpresso Delight will bill all accounts on a 4-week rolling basis on Net 30 days terms. Once the funds are received and cleared in Xpresso Delight’s Designated Account, Xpresso Delight will deposit via EFT into your designated bank account the amount collected minus the Royalty Support Fee due to it, and any other amounts due to it by you, as further outlined below.

5.  National Branding Contribution:  up to 3% of Gross Sales

• Due Date:  By the 15th of each month based upon the Gross Billings for the prior CP4W.

• You will pay your national branding contribution to Xpresso Delight through an EFT.

6.  Transfer Fee:  all Xpresso Delight’s legal fees and costs associated with the transfer or $2,500, whichever is greater

• Due Date:  Before the consummation of the transfer or sale.

• Payable if you transfer or sell your Franchise Business.

7.  Interest:  18% per year (or maximum legal rate, if less)

• Due Date:  On demand.

• Payable on past-due amounts from the due date until paid in full.

8.  Insufficient Funds Fee:  overdue amount plus interest, plus any bank fees incurred because of lack of funds

• Due Date:  On demand.

• Payable if your payments are not honored by your financial institution.

9.  Audit Expenses:  cost of audit, plus late fees

• Due Date:  Immediately after notice from Xpresso Delight.

• You must pay this fee only if the audit shows that you understated your Gross Sales by more than 2%; in addition to formal audits, you must give Xpresso Delight access to your books and records.

10.  Training Fee for Additional Persons:  $1,500 per person

• Due Date:  At time of training.

11.  Additional Training/Assistance:  $250 per day, plus expenses

• Due Date:  As incurred.

• Xpresso Delight charges a daily fee of $250 per day, plus expenses for any special assistance you request that it provides.

12.  Indemnification:  varies under the circumstances

• Due Date:  On demand.

• Payable if Xpresso Delight incurs losses due to your activities under the Franchise Agreement.

13.  Insurance Premiums:  cost of the premium (estimated at $10,000 per year), plus a reasonable fee to reimburse Xpresso Delight for any costs it incurs to obtain insurance coverage on your behalf

• Due Date:  On demand.

• You must reimburse Xpresso Delight if it purchases insurance for you because you failed to do so.

14.  Services Xpresso Delight Provides to Your Customers:  varies

• Due Date:  As incurred.

15.  Conferences:  varies

• Due Date:  Prior to convention.

16.  Supplier Testing Fee:  the amount of the supplier testing fee will not exceed Xpresso Delight’s costs associated with any inspection or testing it conducts

• Due Date:  As incurred.

• If you request Xpresso Delight to approve an alternate supplier, it may charge you the testing fee.

17.  Maintenance of Coffee-making Equipment:  maintenance costs will vary depending on the wear-and-tear on the equipment

• Due Date:  As incurred.

• You must maintain your equipment in good working order, and must repair it as needed to keep it in good working order.

18.  Costs and Attorneys’ Fees:  will vary under the circumstances

• Due Date:  As incurred.

• Payable if you do not comply with the Franchise Agreement.

19.  Enforcement Reimbursement:  Xpresso Delight’s costs and expenses

• Due Date:  On demand.

• Payable if Xpresso Delight must enforce its rights under the Franchise Agreement.

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