Considering The Learning Experience Franchise? Don’t Overlook These 31 Important Franchise Fees

If you are considering The Learning Experience franchise, don’t get blindsided by these 31 important franchise fees (from the initial franchise fee, to the royalty fee, to 29 other fees found in Items 5 and 6 of The Learning Experience’s 2019 FDD).

1.  Franchise Fee:  $60,000

• The franchise fee (“Franchise Fee”) for each Center is $60,000 and must be paid in full in cash or other form of immediate payment that is acceptable to The Learning Experience upon execution of the Franchise Agreement.

2.  Royalties:  7% of the Center’s Gross Revenue, which includes but is not limited to all revenue related to the Center

• Due Date:  First day of each month.

3.  Renewal Expenses:  varies

• Due Date:  As incurred.

• The Learning Experience does not charge a renewal fee but you may incur other charges in order to renew.

4.  Brand Awareness Fund:  currently, 1% of Gross Revenue. The Learning Experience has the right to increase the minimum payment up to 2.5% of Gross Revenue.

• Due Date:  Same as Royalties.

5.  Marketing Materials:  The Learning Experience’s costs plus any licensing fee (up to 18%), shipping, handling, and storage costs

• Due Date:  As incurred.

• Payable only if you request multiple copies of advertising, marketing, and promotional formats and materials that The Learning Experience develops.

6.  Audit Fee:  varies

• Due Date:  Immediately after audit.

7.  Lease Administration Fee:  $1.50 per square foot per year or 8% of annual base rent, whichever is greater

• Due Date:  First day of each month.

• Only payable if The Learning Experience is liable in any form on your lease.

8.  Ongoing Purchases of Proprietary Products:  full purchase price, plus 18% licensing fee and the actual cost of shipping, freight, insurance, and tax, which The Learning Experience currently estimates to be $5,000 to $7,000 per year

• Due Date:  At the time of purchase.

• Only payable if you purchase Proprietary Products from The Learning Experience.

9.  Software Service Fee:  $395 per month

• Due Date:  First day of each month.

• Payable for The Learning Experience’s general software support, which includes 2 hours of telephone support per month.

10.  Additional Software Service Fees:  $100 per hour, plus any travel expenses and hardware repair parts

• Due Date:  As incurred.

• Only payable if you: (1) exceed 2 hours per month of telephone support; (2) require an on-site service call; or (3) require hardware repair.

11.  Interest on Late Payments:  lesser of 18% per year (but not more than the highest applicable rate under law)

• Due Date:  As accrued.

• Only payable if you don’t pay The Learning Experience the amounts you owe within 30 days of their due date. Interest will be charged only on overdue amounts and will start to accrue on the date when the payment was originally due.

12.  Returned Check Fee:  the greater of: (a) $100; or (b) 5% of the amount of the check, plus The Learning Experience’s actual bank charges

• Due Date:  As incurred.

• Only payable if any check or electronic transfer of funds issued by you to The Learning Experience or its Affiliates is dishonored by your bank because of insufficient funds or account closed.

13.  Late Fee for Delayed Payment:  10%

• Due Date:  As incurred.

• Only payable if you fail to pay The Learning Experience any amount due within 10 days of its due date.

14.  Late Fee for Delayed Filing of Required Reports:  $50 for each occurrence, plus an additional fine of $30 per day for each day past the deadline that the report is not submitted. For Corporate Contracts, 5% of each enrolled corporate child’s tuition per day the child is enrolled.

• Due Date:  On demand.

• Only payable if you fail to submit timely and accurate reports to The Learning Experience.

15.  Discounted Training Fee:  $1,500 for each additional person to be trained

• Due Date:  10 days before attendance at training class.

• Only payable if you: (a) choose to send more than 2 individuals to the initial training program; or (b) employ a new Center Director.

16.  Discounted On-Site Training Program:  $1,500 per week

• Due Date:  As incurred.

• Only payable if you employ a new Center Director or Business Manager, there is no training scheduled or available within 60 days of beginning employment, and The Learning Experience provides an on-site training program at your facility.

17.  Refresher Non-Attendance Fee:  $500

• Due Date:  As incurred.

• Only payable if you fail to attend refresher training twice in one year.

18.  Transfer Fee:  $25,000

• Due Date:  With notice of intention to transfer.

• Only payable if you transfer your Center.

19.  Securities Offering:  the greater of: (a) $25,000 or (b) The Learning Experience’s reasonable costs and expenses; plus The Learning Experience’s reasonable costs and expenses incurred in reviewing any additional securities documents

• Due Date:  With notice of intention to make an offering; as incurred.

• Only payable if you make an offering of securities, stock, ownership, or partnership interests in you or your Affiliates.

20.  Alternative Supplier Inspection:  The Learning Experience’s expenses

• Due Date:  As incurred.

• Only payable if you request to purchase from other than approved suppliers and The Learning Experience inspects and evaluates the supplier’s products or services.

21.  Insurance Policy Review Fee:  $1,500

• Due Date:  At time of request for insurance policy review.

• Only payable if you do not use one of The Learning Experience’s pre-approved insurance brokers and/or insurers.

22.  Insurance – Reimbursement of Costs:  amount of premiums and The Learning Experience’s reasonable expenses, plus 18% of these costs

• Due Date:  As incurred.

• Only payable if you fail to purchase and maintain or provide adequate evidence of any required insurance coverage.

23.  Indemnification:  varies

• Due Date:  As incurred.

• Only payable if The Learning Experience or individuals associated with it incurs losses due to any of your activities.

24.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  Upon demand.

• Only payable if you are in default under the Franchise Agreement, in which case you must reimburse The Learning Experience for its expenses (including reasonable attorneys’ fees) as a result of your default and to enforce and terminate the agreement.

25.  Fee for Non-Attendance at Convention:  $1,500

• Due Date:  Upon demand.

• Only payable if you fail to attend The Learning Experience’s annual convention.

26.  Management Fee:  The Learning Experience’s out-of-pocket costs, plus 20% of your Center’s profits, plus the greater of: (a) 4% of your Center’s Gross Revenue; or (b) $2,500

• Due Date:  Monthly.

• Only payable if The Learning Experience is managing your Center.

27.  L.E.A.P. Interactive Monthly Fee:  $149 service fee, plus $3.75 to $5.00 per child per month for L.E.A.P. Interactive curriculum (printed material costs)

• Due Date:  Monthly.

• Flat fee, payable regardless of the number of whiteboards in your Center.

28.  Lost Future Royalties:  present value of the average monthly Royalties you were obligated to pay during the 12-month period immediately preceding the month the Franchise Agreement was terminated, multiplied by the number of months remaining in the initial term

• Due Date:  As incurred.

• Only payable if The Learning Experience terminates the Franchise Agreement due to your default.

29.  Liquidated Damages:  6% of the single-highest monthly Gross Revenue from the previous 36 months, multiplied by 12, multiplied by the number of remaining years under the Franchise Agreement, and that number being reduced to a net present value using a 6% discount rate, plus a default rate of 2 times that value

• Due Date:  Upon termination.

• Only payable if The Learning Experience terminates the Franchise Agreement due to your default or if you improperly terminate the Franchise Agreement.

30.  Bookkeeping Service Fee for Managed Centers:  $250

• Due Date:  First day of each month.

• Only payable if The Learning Experience is managing your Center and you elect to use its bookkeeping services under a Bookkeeping Services Charge Agreement with it.

31.  Late Data Fee:  $150 per day

• Due Date:  As incurred.

• Only payable if you entered a Bookkeeping Services Charge Agreement with The Learning Experience, and you fail to timely gather relevant data.

• Payable for each day The Learning Experience assigns staff to your Center to correct reporting capacity.