Considering a Fleet Feet Franchise? Don’t Overlook These 25 Important Franchise Fees

If you are considering a Fleet Feet franchise, don’t get blindsided by these 25 important franchise fees (from the initial franchise fee, to the royalty fee, to 23 other fees found in Items 5 and 6 of Fleet Feet’s 2019 FDD).

1.  Initial Franchise Fee:  $0 to $38,000

• The initial franchise fee for your franchise if you are not a participant in the Qualified Employee Program or the Independent Retail Store Conversion Program is $38,000.

• Of this amount, $10,000 per franchised business required to be opened is due and nonrefundable, when you sign the Franchise Agreement. The balance will be due at the opening of the franchised business.

• If you and Fleet Feet cannot agree on a site for your franchised business within 9 months, upon your written request submitted to Fleet Feet within 10 days after the 9-month period expires, Fleet Feet will refund 50% of the initial franchise fee paid by you to Fleet Feet.

• At present, Fleet Feet is reducing the initial franchise fee for your second or subsequent Fleet Feet franchise (if the ownership group is the same as the first franchise) to be one-half of what it would be for a franchisee new to the system.

• However, the amount you saved on the second or subsequent location because of this discount (currently $19,000) becomes due to Fleet Feet if and when you sell, transfer, or assign your second or subsequent location (other than to a pre-existing Fleet Feet franchisee) within one year before or after you commence operating it.

• If, prior to applying to become a franchisee, you have been employed full time in specialty running retail for at least 36 months as a full-time employee, defined as one working more than 130 hours per month, then your initial franchise fee under the “Qualified Employee Program” will be $28,000.

• Of this amount, $10,000 is due and payable when you enter into the Franchise Agreement. The remaining $18,000 is due upon opening your new location for business.

• The amount you saved on your franchise because of the Qualified Employee Program (currently $10,000) becomes due to Fleet Feet if and when you sell, transfer, or assign the new location (other than to a pre-existing Fleet Feet franchisee) within one year before or after you commence operating it.

• If you wish to convert an existing store of another brand into a Fleet Feet store (“Independent Retail Store Conversion Program”), the initial franchise fee is waived.

• To qualify under the Independent Retail Store Conversion Program, you must have owned the existing store to be converted for over 5 years prior to the conversion.

• If your gross sales in the calendar year preceding conversion exceed $600,000 (“Pre-Conversion Gross Sales”), Fleet Feet will provide up to $6,000 in branding support for qualified rebranding expenses, which must be spent within the first 12 months following conversion.

• Within 60 days of signing your franchise with Fleet Feet, either party can terminate the Franchise Agreement by delivering to the other party written notice. Within 30 days of proper receipt of that written notice, Fleet Feet will refund to you your initial franchise fee.

2.  Certain Items You Will Need to Operate Your Outlet:  current cost of such items ranges from $0.09 to $1,380

• While Fleet Feet is not required to do so, to benefit from group buying power, from time to time Fleet Feet makes available certain items you will need to operate your outlet on a discounted basis that you can purchase from Fleet Feet or an affiliate.

• The current cost of such items ranges from $0.09 to $1,380. You are free to purchase these items from other sources.

3.  FIT ID Scanner:  $4,250 to $4,750

• Fleet Feet is the distributor of the hardware and related software for its FIT ID technology, which you must purchase. The pre-opening cost for one FIT ID scanner will be $4,250 to $4,750.

4.  Royalty – Standard:  4% of Gross Sales for new Fleet Feet franchised stores

• Due Date:  To be postmarked on the date Fleet Feet specifies after the end of each calendar month.

• Upon written notice, the royalties will be electronically drafted from your bank account on the date Fleet Feet specifies each month.

• You are required to meet an annual sales volume of $350,000 per year following your first 24 months of operation to keep your franchise rights.

5.  Royalty – Independent Retail Store Conversion Program:  from 1% to 4% of Gross Sales based on Pre-Conversion Gross Sales volume

• Due Date:  To be postmarked on the date Fleet Feet specifies after the end of each calendar month.

• Upon written notice, the royalties will be electronically drafted from your bank account on the date Fleet Feet specifies each month.

• Converted stores with less than $1,000,000 in revenue will pay 3% royalty the first 3 years and 4% thereafter.

• Converted stores with more than $1,000,000 in revenue the year before conversion will pay 2% royalty on gross sales for the first 2 years and 3% thereafter.

• Converted stores with more than $1,500,000 in pre-conversion revenue will pay a royalty of 1% of gross sales in year 3, 2% in year 2, and 3% thereafter.

6.  National Marketing Fund:  0.25% of Gross Sales

• Due Date:  Monthly, with royalty payment once you open for business.

• Can be raised by Fleet Feet to be as high as 1% of Gross Sales.

7.  E-Commerce:  currently, $100 per month

• Due Date:  Monthly, drafted prior to the 5th of each month.

• You must pay this monthly fee to FFS Digital. In exchange, FFS Digital will currently pay you a commission on online sales from customers within your Online DMA, which commission is currently 7% of the retail price of qualifying sales.

8.  FIT ID Hardware:  currently, the FIT ID hardware price is $4,750 for your first FIT ID scanner and $4,250 for each additional FIT ID scanner you purchase. You have the option of paying a portion of the hardware price over 12 months.

• Due Date:  As incurred.

9.  Technology Fee:  the Technology Fee covers the cost of your Fit ID software. Currently, the software price varies from $198 to $220 per month based on your number of units.

• Due Date:  Monthly, at the same time and in the same manner as royalties.

10.  Business Conference Registration Fee:  historically ranges from $0 to $600 per person

• Due Date:  As incurred.

• Cost will be set in advance, but will vary based on the event.

11.  Bookkeeping Services “CFO in a Box“ (optional):  varies from 0% to 2% of revenue

• Due Date:  As incurred.

• Fleet Feet will agree on the level of service to be provided and the associated fee on a case-by-case basis.

12.  Customer Experience Services (optional):  currently, $35 per month for self-selecting franchises

• Due Date:  Monthly.

• Cost will be set annually in advance.

• Includes access to customer survey software.

13.  Email Newsletter Services (optional):  currently, $175 per market, plus an additional $50 for each additional market per month for self-selecting franchises

• Due Date:  Monthly.

• Cost will be set annually in advance.

• Includes access to customer email software.

14.  Miscellaneous Vendor Sales from Inventory:  varies

• Due Date:  Upon receipt of invoice from Fleet Feet’s affiliate.

• Purchases vary based upon your needs and available inventory.

15.  Local or Regional Cooperative Fees:  currently not collected; no cooperative currently established

• Due Date:  When designated by cooperative.

• In the event a local or regional cooperative is established for your area, you must participate and you must pay the cooperative the payments the cooperative imposes.

16.  Audit Fee:  the cost of audit

• Due Date:  Due immediately if audit shows greater than 2% underpayment.

• You also pay the underpayment, if any.

• Fleet Feet pays for the audit if underpayment is 2% or less.

17.  Collection and Interest Charges:  18% or highest lawful rate if lower

• Due Date:  Immediately if payment is not made when due.

• This charge is in addition to other remedies such as late payment fee.

18.  Initial Training:  initial franchise fee includes pre-opening training for two people

• Due Date:  On signing of Franchise Agreement.

• For two persons pre-opening, this is included in the first installment of the initial franchise fee. For extra people or post-opening, payment is due before training class commences.

• The business shall be managed by a person, identified to Fleet Feet, who has undergone, or based on experience been relieved of, Fleet Feet’s training program.

• You remain responsible for paying your own lodging, transportation, and food expenses incurred for attending training.

19.  Additional Training (for extra people at outset of your option or later if desired or required):  then-current training fee unless waived by Fleet Feet. If remedial training, then $200/day plus expenses.

• Due Date:  Before training class commences.

• The business shall be managed by a person, identified to Fleet Feet, who has undergone, or based on experience been relieved of, Fleet Feet’s training program.

• In addition, you remain responsible for paying your own lodging, transportation, and food expenses incurred for additional training.

20.  National Training Program Liability Insurance:  current rate is $150 per location and $1.80 per training program participant. The annual rate varies annually depending on total number of participants nationwide. Fleet Feet reserves the right to adjust the rate more frequently if necessary.

• Due Date:  As incurred; upon enrollment.

• Fleet Feet will bill you prior to the beginning of the policy based upon your anticipated number of training program participants.

21.  Late Payment or Insufficient Funds Fee:  $50

• Due Date:  With payment.

• Avoided if royalty received or postmarked by 3rd business day of month or you have sufficient funds in your account when fees or royalty are drafted.

22.  Transfer Fee:  greater of $10,000 or 25% of the then-current franchise fee

• Due Date:  When Fleet Feet approves franchise transfer.

• Fee would be paid by the seller of the existing franchise.

23.  Attorneys’ Fees and Cost of Litigation:  depends on what Fleet Feet spends

• Due Date:  When court orders, if Fleet Feet wins.

• Loser pays winner’s fees and costs to discourage meritless litigation. Fleet Feet could have to pay your fees.

24.  Enforcement Costs:  will vary

• Due Date:  As incurred.

• You must pay Fleet Feet’s costs of enforcement (including attorneys’ fees and costs) if you do not comply with the Franchise Agreement.

25.  Continued Operation After Expiration:  greater of $1,000 or 150% of royalties per month

• Due Date:  Monthly.

• If Fleet Feet permits you to renew the license granted under the Franchise Agreement after a month-to-month continuation of the franchised business, then you must pay to Fleet Feet, in addition to all royalties and other fees due to it, a monthly fee equal to the greater of $1,000 or 150% of the royalties due for the same month for every month of month-to-month operation after the Expiration Date, up to Fleet Feet’s then-current initial franchise fee.