Considering a Code Ninjas Franchise? Don’t Overlook These 31 Important Franchise Fees

Updated June 23, 2020.

If you are considering a Code Ninjas franchise, don’t get blindsided by these 31 important franchise fees (from the initial franchise fee, to the royalty fee, to 29 other fees found in Items 5 and 6 of Code Ninjas’ 2020 FDD).

1.  Initial Franchise Fee:  $15,000 to $31,000

• When you sign the Franchise Agreement for a Code Ninjas Center, you must pay Code Ninjas an initial franchise fee of $31,000 (the “Franchise Fee”). The Franchise Fee for a Code Ninjas Studio is $15,000.

• The Franchise Fee will be fully earned when paid and non-refundable in consideration of administrative and other expenses Code Ninjas incurs in entering into the Franchise Agreement and for Code Ninjas’ lost or deferred opportunities to enter into the Franchise Agreement with others.

• You must pay the Franchise Fee in full at the time you sign the Franchise Agreement.

• Additionally, as described below, if you signed an Area Development Agreement, Code Ninjas will credit the Area Development Fee you paid toward the Franchise Fee. The Franchise Fee is uniform for all franchisees.

2.  Area Development Fee:  $31,000 times the number of Code Ninjas Centers to be developed under the Area Development Agreement, and $15,000 times the number of Code Ninjas Studios to be developed under the Area Development Agreement

• If you are going to be an Area Developer, then you will sign an Area Development Agreement and pay Code Ninjas an area development fee (the “Area Development Fee”).

• The amount of the Area Development Fee will be calculated by multiplying $31,000 times the number of Code Ninjas Centers to be developed under the Area Development Agreement, and $15,000 times the number of Code Ninjas Studios to be developed under the Area Development Agreement.

• The Area Development Fee will be due in a lump sum payment upon the signing of an Area Development Agreement. The Area Development Fee is fully earned and non-refundable in consideration of administrative and other expenses Code Ninjas incurs in entering into the Area Development Agreement, and for its lost or deferred opportunities to enter into the Area Development Agreement with others.

• For each Code Ninjas Center or Studio you open under the Area Development Agreement, you will not be charged a Franchise Fee. The Area Development Fee is uniform for all area developers.

3.  Electronic Systems Fee:  $110 per month

• You will pay Code Ninjas an “Electronic Systems Fee” each month during the term of your Franchise Agreement, which includes your email, website hosting, and access to Code Ninjas’ electronic support systems and operating software. This fee is currently $110 per month.

• You will begin paying this fee on the first day of the month after you sign your Franchise Agreement, and each first of the month thereafter. The amount of this fee that you pay to Code Ninjas before opening will range from $440 to $770 depending on when you open your Code Ninjas Center, and $220 to $440 depending on when you open your Code
  Ninjas Studio, assuming you open within Code Ninjas’ estimated timeframes.

4.  Business and Promotional Items:  $2,000 to $10,000 for Code Ninjas Centers, and $1,000 to $2,500 for Code Ninjas Studios

• Code Ninjas’ affiliate, Thifty Gear, will be the designated supplier of certain business and promotional items to franchisees that must be purchased prior to the commencement of operations of your Franchised Location, including student wristbands and scanners for check-in, robotics kits and classroom materials, uniforms, and other promotional items. Such items are estimated to cost in the range of $2,000 to $10,000 for Code Ninjas Centers, and $1,000 to $2,500 for Code Ninjas Studios.

5.  Royalty (“Royalty Fee”):  for Code Ninjas Centers, the greater of (i) 6.5% of Net Sales or (ii) the Minimum Royalty Fee; for Code Ninjas Studios, the greater of (i) 12% of Net Sales or (ii) the Minimum Royalty Fee

• Due Date:  On Monday after the close of each week, based on the Net Sales for that week.

• “Net Sales” means all revenue related to the operations of the Franchised Location (excluding customer refunds made in good faith and sales taxes collected and remitted to the proper authorities).

6.  General Advertising Fee:  Code Ninjas does not currently charge this fee. However, Code Ninjas may impose a General Advertising Fee of the greater of (i) 3% of Net Sales or (ii) $1,000 per month.

• Due Date:  On Monday after the close of each week, based on the Net Sales for that week.

• This is a fee that you pay to Code Ninjas in consideration of marketing and promotional efforts that it undertakes which benefit the System.

• This fee is not a contribution to an independent advertising fund or a pooled advertising program.

• As of the date of the Disclosure Document, Code Ninjas has not instituted this fee; however, Code Ninjas reserves the right to do so upon 30 days’ notice to you.

7.  Local Advertising and Promotion:  you must directly spend 3% of Net Sales on your local advertising and promotion

• Due Date:  As incurred.

• You must spend this local advertising requirement in compliance with Code Ninjas’ current policies. Code Ninjas currently requires you to spend this on digital marketing of your Franchised Location.

• Code Ninjas offers digital marketing services which you may choose to purchase from it which count toward this requirement. The cost for these services currently ranges from approximately $900 to $1,500 per month.

8.  Call Center Fees:  as of the date of the Disclosure Document, Code Ninjas does not charge this fee. However, if Code Ninjas or its affiliates do so, the base service fees will range from $200 to $1,000 per month, plus a commission of a percentage of any customer acquisitions that Code Ninjas or its affiliates make for you.

• Due Date:  Monthly, on or before the 1st day of each month.

• If Code Ninjas or its affiliates operate a centralized customer service or call center, you may utilize its services to make incoming and outgoing calls to potential customers for you.

9.  Software Licensing Fees:  a minimum of $22 per student per year, plus $1,200 per quarter for an optional license to a curriculum supplement you may use in your Franchised Location

• Due Date:  Upon demand.

10.  Electronic Systems Fee:  $110 per month

• Due Date:  You begin paying this fee on the first of the month following the signing of your Franchise Agreement, and on the first of each month thereafter.

• Code Ninjas reserves the right to charge this fee for products and services related to informational technology, including email, website management, and access to Code Ninjas’ electronic systems and center operating software in connection with the Franchised Location and System.

11.  Annual Convention Registration:  currently, $499 per attendee based on early bird pricing. Code Ninjas may increase this fee annually.

• Due Date:  When you register for the Annual Convention; provided that Code Ninjas will bill you for one registration fee prior to the convention.

• The person holding a controlling interest in your business and your Designated Principal (if different) are required to attend.

12.  Additional Training and Assistance:  $500 per additional person to attend Code Ninjas’ initial training program; and  Code Ninjas’ per-diem charge for additional training (which is currently $500, plus Code Ninjas’ out-of-pocket costs), per trainer

• Due Date:  Upon demand.

• You must pay Code Ninjas’ then-current fee to send more than 3 individuals to its initial training program.

• If Code Ninjas requires, in its sole discretion, that additional training from it is required or if you ask that Code Ninjas (a) provide additional training, or (b) conduct any training session outside of its standard training programs described in the Disclosure Document, and Code Ninjas does so, then you will have to pay its then-current per-diem charge for extra training plus expenses that it incurs.

13.  Product/Supplier Testing and Evaluation Costs:  the costs of testing and evaluation

• Due Date:  Upon demand, if incurred.

14.  Transfer Fee:  $5,000 under the Franchise Agreement. An Area Developer will pay a transfer fee equal to the then-current Franchise Fee for each Code Ninjas Center or Studio not developed.

• Due Date:  At time of transfer.

15.  Renewal Fee:  $2,000

• Due Date:  Before renewal.

• The Franchise Agreement may be renewed after an initial term of 5 years.

16.  Charges for Inspections and “Mystery Customer” Quality Control Evaluation:  will vary under circumstances

• Due Date:  Upon demand, if incurred.

17.  Late Fee and Interest on Overdue Payments:  a late fee equal to 5% of your overdue amount, and interest equal to 1.5% per month (but not more than any maximum rate set by law)

• Due Date:  At time the overdue payments are paid.

18.  Dues and Assessments Imposed by a Franchisee Advisory Council:  as determined by a franchisee advisory council (if established). Currently, none.

• Due Date:  At the times required by a franchisee advisory council.

19.  Center Refurbishment:  will vary under circumstances

• Due Date:  As agreed.

• If you operate a Code Ninjas Center, Code Ninjas may require you to refurbish your Franchised Location to meet its then-current requirements for décor, layout, etc.

• Code Ninjas will not require you to refurbish the Franchised Location more frequently than every 5 years.

20.  Prohibited Product or Service Fine:  $250 per day of use of unauthorized products or services

• Due Date:  If incurred.

21.  Audit Expenses:  all costs and expenses associated with the audit, reasonable accounting and legal costs

• Due Date:  Upon demand.

• Payable only if Code Ninjas audits and the audit discloses an understatement in any statement or report of 3% or more.

22.  Insurance Procurement:  Code Ninjas’ cost to obtain insurance coverage if you fail to do so

• Due Date:  Upon demand.

23.  Relocation Fee:  $1,000, provided that if Code Ninjas’ actual expenses exceed this amount, you must pay the amount which exceeds the fee

• Due Date:  Upon demand.

24.  Securities Offering:  Code Ninjas’ actual expenses

• Due Date:  Upon demand.

• Payable only if you propose to engage in a public or private securities offering, to reimburse Code Ninjas for its reasonable costs and expenses (including legal and accounting fees) to evaluate your proposed offering.

25.  Tax Assessment:  Code Ninjas’ actual expenses

• Due Date:  Upon demand.

• Payable only if there is a sales tax, gross receipts tax, or similar tax or assessment (other than income tax) imposed against Code Ninjas with respect to any payments you make to it under the Franchise Agreement.

26.  Costs and Legal Fees:  will vary under circumstances

• Due Date:  Upon demand.

• You must reimburse Code Ninjas for the expenses it incurs (including reasonable attorneys’ and other legal fees) as a result of your default of the Franchise Agreement and to enforce and terminate the Franchise Agreement.

27.  Standard Default Fee:  up to $250 per violation

• Due Date:  Upon demand.

• In addition to any rights and remedies Code Ninjas may have under the Franchise Agreement, if you breach certain provisions of your Franchise Agreement and fail to cure the default during the applicable cure period, you must pay Code Ninjas up to $250 per month until the default is cured to offset its expenses incurred to address the default.

28.  Additional Cure Expenses, Collection Costs, and Post Termination/Expiration Expenses:  Code Ninjas’ cost and expense if it takes action to cure any default by you under the Franchise Agreement, including costs of collection for unpaid amounts

• Due Date:  Upon demand.

• Due only if you are in default under your Franchise Agreement, in which case you must reimburse Code Ninjas for the additional expenses it incurs (including reasonable attorneys’ and other legal fees) as a result of your default and to enforce and terminate your Franchise Agreement if necessary.

• This also applies if your Franchise Agreement terminates or expires and Code Ninjas incurs expenses in ensuring your compliance with the post-termination and post-expiration provisions.

29.  Indemnification:  will vary under circumstances

• Due Date:  Upon demand.

• You must reimburse Code Ninjas if it is sued or held liable for claims arising from your operation of the Franchised Location, as well as your use of the Proprietary Marks in a manner inconsistent with Code Ninjas’ instructions, and any transfers or securities offerings that you propose.

30.  Liquidated Damages:  lesser of (a) the Royalty Fee owed to Code Ninjas during the 52 weeks of operation preceding the effective date of termination, or (b) the average weekly amount owed during such 52-week period multiplied by the number of weeks remaining in the Franchise Agreement had it not been terminated

• Due Date:  Within 15 days of termination of your Franchise Agreement for cause.

31.  Dojo2Go Mobile Trailer:  variable – leasing or financing costs, maintenance, and expenses

• Due Date:  As arranged and as incurred.

• You will incur additional costs if you operate a Dojo2Go mobile trailer, as you will be required to purchase or lease the trailer, as well as all ancillary costs related to the maintenance, care, and storage of the trailer.

• Code Ninjas also may establish a minimum monthly royalty for the operation of a Dojo2Go mobile trailer upon notice to you.