Detailed Information on AlphaGraphics’ Initial Franchise Fee, Royalty Fee + 19 Other Fees (Items 5 and 6, 2022 FDD)
New Business Center
1. Initial Franchise Fee: $48,950
- Due Date: Due when you sign the Franchise Agreement.
- Also covers the initial training program that you or your Managing Owner must attend, plus training of one designated management-level employee and includes AlphaGraphics’ initial on-boarding support services.
- Does not include any travel and related living costs during attendance.
2. Opening/Reopening Performance Package: $10,000
- Due Date: Due when you sign the Franchise Agreement.
- Includes items as determined by AlphaGraphics to enhance the opening of your Franchised Business Center using the AlphaGraphics System, such as an opening campaign, grand opening event expenses, and marketing support.
- You must use the package within 1 year of signing the Franchise Agreement or it will expire and you will not receive a refund of the payment.
3. Center Development Package: $142,750 to $167,450
- Due Date: Due when you sign the lease for your Center premises, or 90 days prior to the projected opening date of the Center, whichever is later.
4. Royalties (Ongoing): royalties range from 7% down to 3% of Gross Sales, subject to a yearly minimum
- Due Date: The 15th day of each calendar month.
- Royalty rates decline as annual sales volume increases.
- As an incentive, Royalty rates may be reduced for a two-year time period if you acquire a Franchised Business Center through a Conversion or an Acquire and Convert Pathway.
- Royalties may be reduced if you own additional Franchised Business Centers and each is in full compliance with the royalty reduction requirements.
5. AlphaGraphics Integrated Marketing Fee (“AIM Fees”) (Ongoing): 2½% of Franchised Business Center’s Gross Sales. Currently, AlphaGraphics caps AIM Fees at $15,600/year for your first Franchised Business Center and $7,800/year for each additional Franchised Business Center, subject to a yearly minimum.
- Due Date: The 15th day of each calendar month once you begin operating.
- AIM Fees are intended to maximize recognition of the trademarks and patronage of AlphaGraphics Business Centers; to develop and produce advertising, sales, marketing, lead generation, and business development programs; and to provide marketing support to Franchised Business Centers.
- AlphaGraphics also has the option under the Franchise Agreement to establish regional cooperative advertising programs. The Phoenix Region has established a regional cooperative advertising program, which you are required to contribute to if you open a Franchised Business Center in that region.
- AlphaGraphics currently caps AIM Fees as described, but such caps are subject to adjustment.
- If your Franchised Business Center is subject to a Support Program, your AIM Fees are waived for the first 12 months after your Franchise Agreement is signed.
6. Managed Services Program Fee for AlphaGraphics’ Managed Services Program (Ongoing): Mandatory: $1,148.50 to $1,666.17 per month currently; Optional: $0 to $357 per month currently
- The 1st day of each calendar month (beginning the first month after signing the Franchise Agreement).
- The Managed Services Program fee is a monthly fee paid to AlphaGraphics for its Managed Services Program. AlphaGraphics’ Managed Services Program offers franchisees preferred pricing for various services from a number of outside third-party vendors, based on business AlphaGraphics provides to them through its System.
- Under the Program, you pay for mandatory and optional services.
- AlphaGraphics aggregates the amounts due to the third-party vendors for various services. You pay AlphaGraphics a monthly fee based on the aggregate services that you receive.
- This fee may be adjusted periodically based on increases in service costs and/or if AlphaGraphics offers updated, additional, different mandatory or optional services.
- If your Franchised Business Center is subject to a Support Program, your Managed Services Program Fees are waived for the first 12 months after your Franchise Agreement is signed.
7. PrintSmith Vision Fee (One-Time): $15,000
- Due Date: One week before you attend initial training if you are under a New Business Center Pathway or upon opening or conversion to AlphaGraphics’ current designated MIS System in all other cases.
- This is the initial license fee for the PrintSmith Vision software. Currently, you must enter into the PrintSmith Vision License and Support Agreement for the license and ongoing support of the MIS System. If your Franchised Business Center is subject to a Support Program, your MIS System Fee is waived.
8. Print Speak CRM System Fee (One-Time): $250 to $750
- Due Date: One week before you attend initial training if you are under a New Business Center Pathway or upon opening or conversion to AlphaGraphics’ current designated CRM System in all other cases.
- This is the initial license fee associated with the Print Speak CRM Platform. Ongoing license fees associated with Print Speak are included in the Managed Services Program Fee.
9. agOnline Premium System Fee (One-Time): $1,500
- Due Date: Upon opening of the Franchised Business Center for a New Business Center Pathway or upon conversion to AlphaGraphics’ current designated agOnline System at a later time if permitted.
11. Accounting Software: $300
- Due Date: Upon opening Franchised Business Center and annually thereafter.
12. Network Conference Registration Fee (Ongoing): then-current fee (currently $750 per
- Due Date: Payment is due when registering prior to network conference.
- One representative from each Franchised Business Center is required to attend each network conference for the entire duration of the conference.
- AlphaGraphics’ network conference registration fee is currently $750 per person. You will be charged for one registration at AlphaGraphics’ then-current fee if you or your representative does not attend a network conference.
- To attend a network conference, you will also incur other costs, including food, lodging, transportation, and other expenses.
13. Additional Training or Technical Assessment Fee (if applicable): $800 to $1,500 per day, plus all related travel expenses for training and Technical Assessment
- Due Date: Payment is due when services are provided.
- AlphaGraphics trains you or your Managing Owner for the Training Fee. AlphaGraphics may charge you for additional or special training or assistance and for other training programs it periodically provides.
- Although AlphaGraphics does not currently do so, it may also charge you a fee for meetings related to a new service, new operational procedures or programs, business management sales, and promotions including system-wide teleconferences or web conferences.
14. Transfer Fee (if applicable): $48,950
- Due Date: At earlier of when AlphaGraphics grants its conditional consent to the transfer or when the transferee signs AlphaGraphics’ then-current form of Franchise Agreement.
- If you elect to transfer your Franchised Business Center, your transferee will be required to pay a Transfer Fee.
15. Renewal Fee: 30% of then-current Initial Franchise Fee for New Centers
- Due Date: Upon renewal.
- AlphaGraphics may offer discounts on this fee or other incentives as it deems appropriate from time to time in exchange for early renewals.
16. Interest (if applicable); Late Fee (if applicable): interest at the lesser of 1.5% per month or highest contract rate of interest applicable law permits; late fee of $25 or maximum legal rate for each delinquent payment
- Due Date: When billed.
- Interest is due on all overdue amounts. AlphaGraphics may also charge a late fee for each delinquent payment.
17. Audit and Legal Fees (if applicable): $3,000 to $5,000
- Due Date: 15 days after billing.
- Includes AlphaGraphics’ costs of making an on-site inspection.
- Due only if you fail to furnish reports, supporting records, or other required information or understate the Franchised Business Center’s Gross Sales by more than 1%.
- AlphaGraphics will seek reimbursement for accounting and legal fees to enforce the Franchise Agreement if you fail to comply with your obligations; this protects the AlphaGraphics system by not diverting money from support services.
18. Liquidated Damages (if applicable): based on a formula
- Due Date: On or before the termination date of your Franchise Agreement.
- Applicable if you terminate the agreement, other than because of AlphaGraphics’ uncured breach, if you close your Franchised Business Center or if AlphaGraphics terminates the agreement for cause.
- An amount equal to the greater of (a) 3 years of Royalties calculated as follows: the average monthly Royalties of the immediately preceding 24 months of Royalties that were due from you, multiplied by 36, or if you have operated for less than 24 months, the average monthly Royalties of all of the immediately preceding months in which you have operated, multiplied by 36; or (b) 3 years of Minimum Royalties calculated as follows: the aggregate amount that you would have been required to pay in Minimum Royalties for the 36 months following such termination if the Franchise Agreement had not been terminated.
19. Insurance (if applicable): cost of insurance
- Due Date: Payable before opening.
- If you fail to obtain and maintain required insurance, AlphaGraphics may immediately obtain insurance and you must promptly reimburse it for insurance, including late charges.
20. Indemnification Expenses: all costs associated with your obligation to indemnify
- Due Date: On demand if applicable.
- You are required to indemnify AlphaGraphics against and reimburse it for certain claims, obligations, and damages arising out of, from, or related to your operation of your Franchised Business, or your breach of the Franchise Agreement.
21. Non-Compliance Fee: 2.5% of Gross Sales
- Due Date: On demand, following your failure to cure a default.