If you are considering a National Property Inspections franchise, don’t get blindsided by these 9 important franchise fees (from the initial franchise fee, to the royalty fee, to 7 other fees found in Items 5 and 6 of National Property Inspections’ 2019 FDD).
1. Initial Franchise Fee: $34,900
- The fee for an exclusive, protected territory is $34,900.
- National Property Inspections bases its initial franchise fee on the population, housing units, re-sale activity, and real estate offices in the given area.
- All fees are due and payable by you at the time the Franchise Agreement is executed. The initial franchise fee is not refundable in whole or in part.
- Included in the initial franchise fee is the franchise package which includes such items as the cost of initial training, hotel accommodations, noon meals, training material, a copy of National Property Inspections’ proprietary computer software, website, marketing materials, and initial tools.
- National Property Inspections offers a 15 percent discount on the franchise fee for honorably discharged military veterans.
2. Royalty: 8% of gross sales or a minimum of $300 per month, whichever is greater
- Due Date: To be paid by the 10th day of each month.
- Gross cash revenues mean all revenue generated by you from the operation of your franchise. Gross cash revenues do not include sales tax or use tax.
- During your first year in business, beginning with the third full calendar month following initial classroom training, you will be required to pay National Property Inspections a continuing royalty of 8% of the gross sales of your franchise business, or a minimum royalty of $300 per month, whichever is greater.
- Beginning with your 13th month in business, the royalty will be 8% of the gross sales, or a minimum of $400 per month, whichever is greater; and beginning with your 25th month, the royalty will be 8% of the gross sales, or a minimum of $500 per month, whichever is greater.
- All fees are to be paid in U.S. dollars and are not refundable in whole or in part.
- National Property Inspections may require you to pay continuing Royalty Fees by electronic funds transfer and you must provide all documentation required to authorize payment by electronic funds transfer.
3. Delinquent Service Fee Charge – Royalty: $50 per occurrence
- A delinquent service fee charge of $50 per occurrence is due if royalty fees are not received by the 10th of each month. This fee will be assessed and will accrue for each month for which the royalty fee is late. National Property Inspections reserves the right to increase this fee at any time upon 30 days notice to you.
4. Delinquent Service Fee Charge – Outstanding Invoices for Supplies and/or Services Rendered: 18% per annum
- A delinquent service fee charge of 18% per annum applies to any outstanding invoices for supplies and/or services rendered.
- National Property Inspections reserves the right to increase this fee at any time upon 30 days notice to you.
5. Advertising/Sales/Marketing: you are not required to advertise, however, National Property Inspections suggests at least 2% of gross sales annually
6. Audit: if National Property Inspections audits, cost of audit plus the royalty fee % of understatement plus interest
- Due Date: 15 days after receipt of audit report.
- National Property Inspections’ representatives will have the right at all reasonable times to inspect your books, records, and cash control devices or system.
- Upon the discovery of a discrepancy – an understatement of revenue – in the report of gross receipts of 2% or more, you must pay National Property Inspections monies owed as well as interest at the maximum rate permitted by law, and reimburse National Property Inspections for any and all expenses connected with the audit, including, but not limited to, travel, lodging, and wage expenses, and reasonable accounting and legal costs.
- If such audit does not reveal an underpayment of 2% or more, you will not be charged for the cost of the audit.
- At the end of each tax year, you must submit to National Property Inspections a copy of your business income schedule from your tax return.
7. Travel and Lodging Expenses for Training: varies
- On an ongoing basis, and when available, National Property Inspections will provide you with training and new concepts, procedures, products, and training aids whereby you may train your own personnel; marketing assistance to help you realize full volume potential; and a toll-free number for prompt communication between you and National Property Inspections.
- National Property Inspections will also train key personnel within your organization during a regularly-scheduled training class when space is available for the current fee for each additional person trained. You will pay your employee’s travel and lodging expenses to said training.
8. Transfer: the then-current transfer fee
- Due Date: Upon transfer.
9. Insurance Coverage Required for Errors and Omissions and General Liability: estimated down payment of $625 to cover the first 3 months of coverage and monthly payments of $209 thereafter, depending on your location and subject to change by the insurance carrier
- Due Date: Prior to start of your business operation.
- Should the franchisee, for any reason, fail to procure and maintain insurance coverage as required by the Agreement, National Property Inspections will have the right and authority, without, however, any obligation, to immediately procure such insurance coverage and to charge you, which charges, together with a reasonable fee for expenses incurred by National Property Inspections in connection with such procurement, will be payable by you immediately upon notice or may constitute grounds for termination.
- Failure of the franchisee to maintain any such insurance coverage and to provide National Property Inspections with the required certificate of insurance in a timely manner constitutes grounds for termination.