If you are considering a Maaco franchise, don’t get blindsided by these 18 important franchise fees (from the initial franchise fee, to the royalty fee, to 16 other fees found in Items 5 and 6 of Maaco’s 2019 FDD).
1. Initial Franchise Fee: $10,000 to $40,000
- You must pay Maaco a $40,000 initial franchise fee in a lump sum when you sign the Franchise Agreement.
- If you are an existing franchisee in good standing or a new franchisee to the Maaco system and commit to develop and open more than one Maaco Center, you will pay an incremental initial franchise fee of $20,000 for the second Maaco Center, $17,500 for the third Maaco Center, and $15,000 for the fourth and each additional Maaco Center.
- If you commit to develop and open more than one Maaco Center at the same time, you must sign Maaco’s Development Agreement and Franchise Agreement Addendum and abide by a development schedule.
- If you own an existing repair facility that has been in operation for at least 2 years and that has been providing Maaco’s core services, and you convert the repair facility to a Maaco Center, your initial franchise fee is $25,000.
- Also, Maaco participates in the International Franchise Association’s “VetFran Program,” which encourages companies to provide special financial incentives to qualified Veterans. A new franchisee who qualifies as a Veteran will pay a $10,000 initial franchise fee; however, if Maaco used the services of a franchise broker or other referral source, this initial franchise fee reduction will not apply.
2. Initial Training and Opening Fee: $5,000
- You must pay Maaco a non-refundable Initial Training and Opening Fee of $5,000 when you (or your majority investor) arrive at the initial training program (or 30 days before you are scheduled to open the Center if you are an existing franchisee that is not attending the initial training program).
- Additional people may attend the initial training program if you pay Maaco’s then-current training fees for any additional attendees (currently, $2,500 per attendee). You are responsible for the attendees’ travel, lodging, meal, and other expenses during initial training.
3. Initial Advertising Contribution: $15,000 to $20,000
- You must pay Maaco a non-refundable Initial Advertising Contribution of $20,000 when you arrive at the initial training program, or, if you are an existing franchisee and will not attend initial training, 30 days before opening.
- The Initial Advertising Contribution is $15,000 under the Conversion Program.
- Maaco will use the Initial Advertising Contribution for your pre-opening and grand opening promotions, post-opening promotion, promotional materials, initial marketing of the Center (including during the first 13 weeks of the Center’s operation), and other related activities, including search engine and digital assets.
- The actual costs of these programs may exceed your Initial Advertising Contribution, in which case Maaco will charge you the difference.
- Maaco does not charge you an Initial Advertising Contribution when you renew your franchise.
4. Pre-Opening Items: $163,000
- You may elect to purchase an equipment package, opening inventory, stationery, signage packages, and computer hardware from Maaco or its affiliates. Based on current costs, Maaco estimates your purchase of these pre-opening items from Maaco or its affiliates will be $163,000.
5. Royalty Fee: 9% of gross receipts (except that if you develop the Center as a new Maaco Center, you will pay 4% of gross receipts of the Center for the first 6 months the Center is open to the public as a Maaco Center)
- Due Date: Payable weekly on Friday of each week on royalties due for the preceding calendar week by electronic withdrawal.
- Maaco offers a 1% royalty reduction for timely payments under certain circumstances. Maaco offers royalty reductions for qualified franchisees under certain circumstances. Maaco reserves the right to modify or discontinue these policies in the future.
- The 4% royalty reduction for a new Maaco Center does not apply if you sign a Franchise Agreement for a Maaco Center you purchase from Maaco, its affiliate, or another franchisee.
6. Weekly Marketing Fee: $990, or an amount equal to the weekly marketing budget of franchisees operating in your designated market area as of the date of the Franchise Agreement, whichever is greater
- Due Date: Payable weekly at the same time weekly royalty payments are due.
- Maaco has the right to increase this fee at any time after you sign the Franchise Agreement; provided, however, that the amount of any increase after the first 12 months you operate the Center may not exceed 10% per year.
- The amount of the increase is cumulative and, if Maaco does not increase your marketing fee by the maximum amount permitted in any given year, it may add the amount not charged to you in any given year to the amount chargeable to you in the subsequent year.
7. Telephone Fee: $10 for all Maaco Centers
- Due Date: Payable weekly at same time royalty payments are due.
- Maaco will use this fee to provide and maintain remote call forward (“RCF”) numbers for the purposes of tracking performance and, in some cases, recording phone calls. Maaco will notify you of any increases in the telephone fee.
8. Software License Fee: $389 per month for traditional Maaco Centers
- Due Date: Payable monthly on first of each month.
- You must pay Maaco a monthly software license fee for access to the designated shop management system.
9. Audit Expenses: cost of audit, including the charges of any independent accountant and attorneys, and per diem fees and costs of Maaco’s employees’ related travel and lodging and other out-of-pocket costs, plus interest
- Due Date: Upon receipt of audit report.
- Payable only if audit discloses an understatement of your gross receipts or if you fail to produce all books and records to be audited at the time specified by Maaco.
10. Sales Commission: 10% of the gross sales price of the Center or $30,000, whichever is greater
- Due Date: On or before closing date.
- Paid to Maaco if it obtains for you a purchaser for your Center or if you sell your Center to an individual under an agreement with Maaco.
11. Transfer Fee: $2,500
- Due Date: Prior to effective date of transfer.
12. Renewal Fee: $2,500
- Due Date: On or before renewal date.
- Payment to be included with renewal documents.
13. Interest on Late Payments: the maximum rate permitted by law or, in the absence of such rate, a rate equal to 1.5% per month
- Due Date: As incurred.
- Any payment or other amount you owe Maaco or its affiliates or subsidiaries will bear interest, compounded monthly, after the due date.
14. Insurance Reimbursement: policy cost, plus reasonable fee for Maaco’s expenses
- Due Date: As incurred.
- If you do not obtain the required insurance coverage, Maaco may secure coverage for you and charge you for its costs and expenses.
15. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You must indemnify and hold Maaco, its parents, affiliates, and subsidiaries, together with all of their respective former, present, and future officers, directors, shareholders, employees, agents, attorneys, servants, representatives, heirs, successors, assigns, and predecessors, in their individual and corporate capacities, harmless against any and all claims arising from the operation of the Center.
16. Costs of Enforcement: will vary under circumstances
- Due Date: As incurred.
- Includes any judgment, reasonable attorneys’ fees, court costs, and expenses of litigation.
17. Sublease Payments: will vary under circumstances
- Due Date: Monthly.
- Although Maaco or its affiliates generally do not sublease the Center premises to you, if it does so, the rent under the sublease may exceed the rent it (or its affiliate) pays to the prime landlord. The mark-up will generally not exceed 10% of the rent and other charges due under the prime lease.
18. Technology Fee: currently, $0
- Due Date: Weekly.
- Maaco reserves the right to charge you a weekly technology fee.