Considering a Pet Supplies Plus Franchise? Don’t Overlook These 19 Important Franchise Fees

If you are considering a Pet Supplies Plus franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Pet Supplies Plus’s 2019 FDD).

1.  Initial Franchise Fee:  $35,000 to $49,900

• You must pay Pet Supplies Plus a lump sum initial franchise fee of $49,900, when you sign the Franchise Agreement (the “Initial Franchise Fee”).

• If you already operate a retail pet store that Pet Supplies Plus approves for conversion to a Pet Supplies Plus Store, it will waive the Initial Franchise Fee provided that you order all required signage at the time you sign the Franchise Agreement.

• The initial franchise fee is fully earned and non-refundable when paid. Pet Supplies Plus has the right to offer a discounted Initial Franchise Fee from time to time. If you are an existing franchisee, Pet Supplies Plus will reduce the Initial Franchise Fee to $35,000 for the second and any subsequent Stores you open.

• Pet Supplies Plus is a member of the International Franchise Association (“IFA”) and participates in the IFA’s VetFran Program, which provides a 20% discount on the Initial Franchise Fee to honorably discharged veterans of U.S. Armed Forces who otherwise meet the requirements of the VetFran program. This is only applicable for the first Pet Supplies Plus franchise awarded to you.

• If you are an employee of Pet Supplies Plus, you will be eligible for a reduced initial franchise fee of $10,000, of which $5,000 is paid contemporaneously with the execution of the Franchise Agreement, and the remaining $5,000 is payable at the time you execute a lease for your Store (“Employee Initial Franchise Fee”). The Employee Initial Franchise Fee applies to only the first Store executed by an otherwise eligible franchisee.

• If you do not sign a lease for your Store, the remaining $5,000 due as part of the Employee Initial Franchise Fee will be due immediately upon termination of your Franchise Agreement.

2.  Grand Opening Advertising:  $30,000

• Pet Supplies Plus will also collect $30,000 prior to your opening in order to conduct a grand opening advertising campaign on your behalf. Pet Supplies Plus will refund any unspent amounts to you within 90 days after your opening.

3.  Initial Inventory:  $140,000 to $230,000

• You must purchase approximately 35% to 65% of your initial inventory from Pet Supplies Plus’s affiliate, PSP Distribution, prior to opening. You must obtain and maintain $140,000 to $230,000 in inventory, of which $49,000 to $120,250 must be purchased from Pet Supplies Plus’s affiliate, which represents approximately 35% to 65% of this total.

4.  Set Up Fee:  $10,000

• Before opening, you must pay Pet Supplies Plus a set up fee of $10,000 (“Set Up Fee”). The Set Up Fee is paid in consideration for Pet Supplies Plus’s on-site advisory role in connection with setting up and/or relocating or remodeling the Store premises.

5.  Multi-Unit Fee:  $49,900 for the first Store that you agree to open under your Multi-Unit Agreement, plus $35,000 for each additional Store you agree to open under your Multi-Unit Agreement

• If you choose to enter into a Multi-Unit Agreement, you must pay the multi-unit fee in full when you sign the Multi-Unit Agreement (the “Multi-Unit Fee”). Pet Supplies Plus will not charge an additional fee when you sign a Franchise Agreement for each Store developed under the Multi-Unit Agreement.

• The Multi-Unit Fee will be equal to $49,900 for the first Store that you agree to open under your Multi-Unit Agreement, plus $35,000 for each additional Store you agree to open under your Multi-Unit Agreement.

• All Multi-Unit Fees are deemed fully earned and non-refundable when paid.

6.  Royalty:  2% of monthly Gross Sales for first 12 months of operation; 3% of monthly Gross Sales after first 12 months of operation

• Due Date:  Payable on the 10th of each calendar month for the prior calendar month’s operation via EFT.

• Gross Sales are the total gross revenues for all business conducted at or from your Store, net of documented returns, refunds, and allowances granted according to Pet Supplies Plus’s standards and specifications, and excluding any sales tax.

7.  Technology Fee:  estimated to be $800 to $1,200 per month based on Store build out

• Due Date:  Payable on the 10th of each calendar month for the current calendar month’s operation via EFT.

• The technology fee covers various items related to the technology and computer system used at your Store, such as software licenses and support costs.

8.  Point of Sale (POS) Leasing Payments:  estimated at $300 to $800 per month (based on capital costs of $15,000 to $35,000)

• Due Date:  Payable on the 10th of each calendar month following installation of the required technology.

• The capital cost of the POS system and related equipment varies by Store based on number of lanes and other factors. All equipment must be leased from Pet Supplies Plus under its prescribed form of sublease agreement.

9.  Advertising:  currently $3,000 per month, $1,000 of which goes to the National Advertising Fund

• Due Date:  Payable on the 10th of each calendar month for the current calendar month’s operation via EFT.

• You must submit proof of expenditures and an annual local marketing plan.

10.  Late Fee and Insufficient Funds:  the lesser of 1.5% per month or the highest permissible interest rate

• Due Date:  10 days after the balance is due.

• This charge is in addition to any other remedy and is not PSP’s sole relief regarding late payments, and it will also apply to payments made to PSP’s affiliates.

11.  Audit Fee and Surcharge:  25% of the royalty on unreported Gross Sales plus the royalty and other required fees due, and applicable late fees

• Due Date:  As invoiced.

• If Gross Sales are understated by 2% or more, you must also pay for the cost of the audit.

12.  Renewal Fee:  $2,500

• Due Date:  Upon submitting a request for renewal.

13.  Transfer Fee:  $5,000

• Due Date:  Upon approval of transfer.

14.  Additional Training Fee:  $300 per day

• Due Date:  As invoiced.

• Payable if you need additional training besides the pre-opening training course. If you enroll in optional training regarding additional services, you will be required to pay Pet Supplies Plus’s then-current tuition fee.

15.  Insurance:  cost of insurance; if you fail to maintain insurance as required, Pet Supplies Plus has the right to procure insurance on your behalf and charge an 18% administrative fee in addition to the cost of the insurance

• Due Date:  As invoiced.

• You are required to maintain the types and amounts of insurance specified in Item 8.

16.  Supplier Network Re-Entry Fee:  $500

• Due Date:  Upon request.

• You must use Pet Supplies Plus’s approved and designated suppliers for all goods and services used in connection with operating the business. If you use a non-approved supplier for any good or service and then attempt to re-enter Pet Supplies Plus’s supplier network to purchase that particular good or service, you must pay Pet Supplies Plus a fee of $500 per product or service, to reimburse it for its administrative expenses.

17.  Penalty Fee:  $500

• Due Date:  When incurred.

• If you purchase supplies, signs, furnishings, fixtures, equipment, or inventory from an unapproved supplier, or if you offer any unauthorized or discontinued products or services at or from your Store, Pet Supplies Plus may charge you a penalty fee of $500 for each occurrence.

18.  Indemnification:  amount of claim or judgment

• Due Date:  When incurred.

• You must indemnify Pet Supplies Plus for certain claims or actions arising out of your operation of the Store and misuse of Pet Supplies Plus’s Marks and System.

19.  Post-Termination and Post- Expiration Expenses:  costs and expenses associated with ceasing operations and de-identifying yourself from the Store and Pet Supplies Plus’s System

• Due Date:  As incurred.