If you are considering a Mr. Rooter franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Mr. Rooter’s 2018 FDD).

1.  Initial Franchise Fee:  $35,000

• The initial franchisee fee you must pay to Mr. Rooter is $35,000 (the “Minimum Initial Franchise Fee”), which is a fee for a territory of up to 100,000 in population, and if you wish to purchase additional territory (beyond 100,000 in population), you must pay Mr. Rooter $350 per each additional 1,000 population in the territory (or a pro-rated amount for additional territory with population of less than 1,000).

• As a member of the International Franchise Association (“IFA”), Mr. Rooter participates in the IFA’s VetFran Program. If you are a United States or Canadian honorably discharged veteran who meets Mr. Rooter’s qualifications for purchasing a franchise, Mr. Rooter will discount the Minimum Initial Franchise Fee ($35,000) by 15%.

2.  License Fee:  5% to 7% of Gross Sales, except for special rates that apply to Specialty Services, “roll-in” sales, and sales in TAFS. In addition, minimum license fees apply.

• Due Date:  Tuesday, 5:00 p.m. Central Time, each week.

3.  MAP Fee:  2% of Gross Sales except for special rates that apply to Specialty Services and “roll-in” sales. In addition, minimum MAP fees apply.

• Due Date:  Tuesday, 5:00 p.m. Central Time, each week.

4.  Advertising Cooperative:  not to exceed 8% of Gross Sales

• Due Date:  Determined by coop members.

• Mr. Rooter may designate local advertising markets and if designated, you must participate in and contribute to the cooperative advertising and marketing programs in your market.

• The members of the cooperative establish their own procedures and contributions, subject to Mr. Rooter’s approval.

5.  Software System Fees: $65 per month, plus: There is a $50 setup fee plus $5 per month for each additional ZeeMail email account (after the first email account); plus any support or maintenance on the Point of Sale system (currently ServiceTitan) is provided at Mr. Rooter’s then-current hourly rates (currently $125 per hour)

• Due Date:  When you are billed, starting the earlier of the month you begin operating your Business or the month when the first software solution is set up.

6.  Call Center Services Monthly Fees:  one-time set up fee: $249.00; monthly fees – tier one: $0.98/minute; tier two: $0.93/minute; tier three: $0.88/minute; tier four: $0.84/minute; $50 minimum monthly fee

• Due Date:  Monthly or at such other time(s) as Mr. Rooter specifies.

• Mr. Rooter reserves the right to require you to use its preferred service provider to receive call center services.

7.  Annual Convention (“Reunion”) Fees:  currently, $1,000 or less

• Due Date:  When you are billed, which may be via automatic bank draft, or within 30 days after Reunion via automatic bank draft.

• Mr. Rooter charges you a per-person registration fee to attend the Reunion. You must attend Reunion each year.

• Mr. Rooter will charge you this fee regardless of whether you actually attend.

8.  Transfer Fee:  the greater of (i) $7,500 or (ii) 5% of the sales price

• Due Date:  Before transfer.

• You must pay Mr. Rooter this fee on the total gross sales price of the Business, including all assets of the Business, when you sell your Business, but Mr. Rooter may discount or waive the transfer fee if the transfer is to a legal entity you control or to a member of your immediate family.

9.  Late Fees:  $10 per day

• Due Date:  On demand.

• Applies to fees that are more than 10 days overdue.

10.  Dishonored Check or ACH Draft:  $25

• Due Date:  On demand.

• You must pay Mr. Rooter for each check returned or ACH draft refused by your financial institution for insufficient funds in your account.

11.  Interest:  12% on unpaid balances

• Due Date:  On demand.

• Payable on all overdue amounts.

• The 12% charge is calculated as a per annum rate but may be collected on demand, including weekly or monthly through automatic bank draft.

12.  Failure to Maintain Insurance:  Mr. Rooter’s actual cost for insurance premiums and a reasonable fee for expenses it incurs

• Due Date:  On demand.

• If you fail to maintain the required insurance coverage on your franchise, Mr. Rooter may acquire and pay for the insurance coverage and charge you.

13.  Audit:  cost of audit, plus expenses, plus any amount owed as shown by the audit, plus interest and late fees

• Due Date:  When you are billed.

• Payable only if Mr. Rooter finds an understatement of Gross Sales of 2% or more or if you fail to provide requested information within 30 days of its request.

14.  Renewal Fee:  $5,000

• Due Date:  On renewal.

15.  Amendment Fee:  $250

• Due Date:  When you are billed.

• You must pay Mr. Rooter a processing fee for modifications to your Franchise Agreement that are made at your request.

• When you request an amendment to your Franchise Agreement or related agreements, Mr. Rooter may require that you sign a general release releasing it from all claims you may have except claims which, under state law, may not be released.

16.  Unapproved Suppliers:  Mr. Rooter’s actual out-of-pocket costs of inspection or testing

• Due Date:  On demand.

17.  Indemnification and Attorneys’ Fees and Costs:  varies according to loss

• Due Date:  On demand.

• If Mr. Rooter must engage an attorney to enforce its rights under the Franchise Agreement and it prevails, or if it is sued because of something you do or fail to do, you must indemnify it and/or reimburse it for all costs, including reasonable attorneys’ fees.

18.  Tax Reimbursement:  varies according to tax

• Due Date:  When you are billed.

• You must pay Mr. Rooter or to taxing authorities (as applicable) an amount equal to any sales tax, use tax, gross receipts tax, documentary stamp tax, or similar tax (other than income tax), fees, or charges imposed on Mr. Rooter due to any required payments you make to it.

• You must pay Mr. Rooter such additional amounts as necessary so that it receives all payments from you in full as if no such tax applied.

19.  Key Accounts/Management Fee:  up to 5% of total Gross Sales related to Key Account work, including Gross Sales that relate to Key Accounts; Gross Sales that are the result of any lead or any agreement developed by Mr. Rooter’s Business Development Department or any similar group that is part of its company or its designee; Gross Sales for work that is dispatched from any call center operated by Mr. Rooter or its designee; Gross Sales that are audited by Mr. Rooter or its designee according to Key Accounts standards or Gross Sales that otherwise benefit from its Key Accounts activities or management

• Due Date:  When you are billed or when the fee is deducted from your payment(s) for work performed or added to the invoice.

• If you participate in Mr. Rooter’s Key Accounts program, Mr. Rooter reserves the right to require you to pay a Key Accounts/Management Fee to it or its designee.

• Mr. Rooter may also sometimes refer to this fee as a “Key Accounts Management Fee” or “Management Fee.”

20.  Additional Training Fees:  then-current fee; currently, up to $1,000 per day

• Due Date:  When you are billed.

• If you request training in addition to the initial training program, Mr. Rooter may charge you a training fee, plus you must pay your costs and expenses in connection with such training.