If you are considering a CMIT Solutions franchise, don’t get blindsided by these 21 important franchise fees (from the initial franchise fee, to the royalty fee, to 19 other fees found in Items 5 and 6 of CMIT Solutions’ 2018 FDD).

1.  Initial Fees:  $49,950 to $54,950

• You must pay the Initial Fee (“Initial Fee”), which includes a Franchise Fee and any Territory Fee, as follows:

• There are two Franchise Fee Tiers:

• (a) Tier One: The Franchise Fee is $49,950 and applies to a geographic territory (the “Territory”) comprised of entire, contiguous U.S. Postal Zip Codes containing a minimum of 3,000 and a maximum of 3,500 Small Business Establishments (SBEs) within your Territory that meet CMIT’s then-current criteria for business size.

• (b) Tier Two: The Franchise Fee is $54,950 and applies to a geographic Territory comprised of entire, contiguous U.S. Postal Zip Codes with a minimum of 3,501 and a maximum of 4,000 SBEs within your Territory that meet CMIT’s then-current criteria for business size.

• A Territory Fee will apply for Tier Two of $11 for each SBE in excess of 4,000 SBEs within the Territory. The Territory size will not exceed 4,250 SBEs and the Territory Fee will not exceed $2,750.

• The Initial Fee for an Affiliate Franchise (an existing entity that is converting into a CMIT Solutions Franchise) is the same as the Initial Fee described above; however, CMIT provides a discount on the total Initial Fee based on your average monthly revenues (excluding sales of hardware and software) for the prior two years.

• CMIT will discount the Initial Fee by up to 50% if your average monthly revenue (excluding sales of hardware and software) is more than $10,000, and up to 20% if your annual revenue is more than $70,000.

• CMIT may return the Initial Fee (less any expenses that it has incurred) to you if you do not make satisfactory progress in Initial Training. There will be no refund of the Initial Fee under any other circumstances. Fees for Affiliate Franchises are not refundable under any circumstances.

• CMIT participates in VetFran and offers a discount of 20% off the Initial Fee on the first franchise unit to a Qualified Veteran.

2.  Royalty:  Royalty for the first 12 months following your completion of the initial CMIT Solutions franchise training will be calculated at 6% of Gross Professional Services (“GPS”) revenue and not subject to any minimum Royalty payments. Following those first 12 months, the Royalty is calculated by a sliding scale of 6% to 3% of GPS revenue or the minimum Royalty, whichever is greater.

• Due Date:  Payable monthly.

• CMIT may annually increase the minimum fee amounts but not by more than the CPI.

3.  Marketing Development Fund (“Fund”) Contribution:  for the first 12 months following your completion of the initial CMIT Solutions franchise training, MDF contribution will be calculated as a straight 2% of GPS and not subject to any minimum payments. After those first 12 months, the MDF contribution will be calculated by a sliding scale of 2% to 0% of GPS revenue or the minimum MDF contribution, whichever is greater.

• Due Date:  Payable monthly.

• CMIT may annually increase the minimum fee amounts but not by more than the CPI.

4.  Regional Cooperative Advertising Fund (if applicable):  to be determined by members of the cooperative, but not to exceed $1,000 per month

• Due Date:  Established by members of the cooperative.

• Payable only if CMIT requires you to join a local advertising cooperative organized or approved by it.

• CMIT currently does not oversee any local advertising cooperatives.

5.  Additional Training:  $1,500 per person for the entire Initial Training Program, or CMIT’s then-current fee

• Due Date:  As incurred.

• CMIT trains up to 3 persons at no charge as part of your agreement.

6.  Electronic Fund NSF Fee:  amount charged by CMIT’s financial institution, or $100, whichever is greater. This amount may be lower in some states under state law.

• Due Date:  Upon notification of draft dishonor.

• If any electronic funds transfer is not honored by your bank, you must pay the service charge by CMIT and the bank, if any.

7.  On-Site Training and Coaching:  per diem fee of the trained representatives, plus their costs of travel, lodging, meals, and wages, or the costs of travel, lodging, and meals for CMIT’s staff for training and/or coaching

• Due Date:  As incurred.

• CMIT provides on-site training and coaching as needed, subject to the availability of personnel.

8.  Software Enhancements:  to be determined by the type of enhancement

• Due Date:  As incurred.

• CMIT or a third party may develop customized software configurations.

• CMIT may make available to you any enhancements developed, for which it may charge a reasonable fee.

9.  Technology Fee:  $75 per month per unit franchise, or the then-current fees

• Due Date:  Payable monthly.

• To support franchisees in running their franchise, including email (excluding exchange accounts), website and call routing, IT support of the franchise business, and sales force training.

10.  Managed Services: (a) an ongoing monthly fee of $2.89 per workstation and up to $30.00 per server under management, or the then-current fees; (b) an ongoing monthly fee of $17.60 per user for help desk and NOC services during business hours, including the support for one workstation, or $21.73 for 24-hour help desk and NOC services, or the then-current fees. Server cost remains at $30.00 or the then-current fees.

• Due Date:  As incurred.

• (a) This fee is payable only if you have workstations and servers under remote management.

• (b) This fee is payable only if you have users under contract for help desk services.

11.  Autotask:  $76 per month for 2 users (this base fee includes 1 free helpdesk user), $38 for each additional license. There is a one-time $60 set up fee, or the then-current fee.

• Due Date:  Payable monthly.

• Comprehensive IT, MSP, and Service Delivery Ticketing and Invoicing System.

12.  Renewal Fee:  $8,000 for one or more Franchise Agreements being renewed at the same time

• Due Date:  Upon renewal.

• You must sign the then-current Franchise Agreement and pay a renewal fee instead of an initial franchise fee.

• You also may be required to attend training classes and be re-certified.

13.  Convention:  $660 or the then-current fee

• Due Date:  Annually.

• Payment and attendance are required.

14.  Franchise Broker Resale Fee:  then-current fee as contracted between CMIT and the broker referring a buyer. The range for the Franchise Broker Resale Fee is currently $24,000 or 10% of the purchase price, whichever is higher.

• Due Date:  Due at the time a purchase and sale agreement is executed and funds change hands.

• This fee is in addition to the Transfer Fee.

15.  Franchise Transfer Fee:  $15,000 ($8,000 if the transfer is to an existing franchisee; this does not include the employees of an existing CMIT Solutions franchisee)

• Due Date:  Prior to closing sale or transfer.

• Payable if you sell your franchise. No charge if franchise is transferred to a corporation that you control.

16.  Death or Disability Management Fee:  a cash reserve sufficient to allow CMIT to provide management of the operations of the CMIT Solutions franchise must be set aside as compensation for the management services provided, in addition to the Royalty Fees and Fund Contributions due under the Franchise Agreement. At a minimum, this would be 20% of the gross sales for one-quarter year or 90 days of the CMIT Solutions franchise revenue.

• Due Date:  At time services are rendered.

• If, after your death or permanent disability or that of a Major Owner, the business is not being managed by a trained manager, CMIT may appoint a manager to maintain the operation of the business until an approved assignee is able to assume the management and operation of the business.

17.  Late Payment Fee:  18% interest per year (or maximum legal rate, if lower) on unpaid balance

• Due Date:  Due on demand.

• Payable with all fees or assessments that are more than 5 days delinquent.

18.  Late Report Fee:  $100 per violation

• Due Date:  Due on demand.

• Payable only if a required report or financial statement is not submitted by the due date.

19.  Electronic Marketing Violation Fee:  $1,500 per violation

• Due Date:  Due on demand.

• Payable on all franchisee’s marketing activities that are violations of the marketing rights contained in the Franchise Agreement.

20.  Collection Costs:  all collection costs, including reasonable attorneys’ fees

• Due Date:  Due on demand.

• Payable only if CMIT is required to retain an attorney or collection agency to collect delinquent payments.

21.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse CMIT if it is held liable for claims from the operation of your CMIT Solutions franchise.