If you are considering a D1 Training franchise, don’t get blindsided by these 28 important franchise fees (from the initial franchise fee, to the royalty fee, to 26 other fees found in Items 5 and 6 of D1 Training’s 2019 FDD).
1. Franchise Fee: $59,500
- When you sign the Franchise Agreement, you will pay D1 Training an initial franchise fee of $59,500, payable in a lump sum.
- D1 Training offers a reduced franchise fee for those who wish to open and develop multiple D1 Training Facilities. If you meet the conditions to pursue this, D1 Training shall reduce the initial franchise fee as follows:
- (i) $30,000 for your second Franchise Agreement;
- (ii) $29,500 for your third Franchise Agreement;
- (iii) $29,000 for your fourth Franchise Agreement;
- (iv) $27,000 for your fifth Franchise Agreement;
- (v) $26,000 for your sixth Franchise Agreement;
- (vi) $23,500 for your seventh Franchise Agreement;
- (vii) $21,500 for your eighth Franchise Agreement;
- (viii) $19,000 for your ninth Franchise Agreement; and
- (ix) $19,000 for your tenth Franchise Agreement.
- D1 Training will discount the amount of 10% off of either your franchise fee or your total area Development Fee if you are a veteran of the United States armed forces and provide the necessary documentation to verify that you are a retired or honorably discharged veteran.
- D1 Training will fully earn the initial franchise fee when you pay it, and it is not refundable.
2. Development Fee: $89,500 to $284,000
- If D1 Training elects to enter into an Area Development Agreement, you would pay D1 Training a Development Fee according to the number of D1 Training Facilities you agree to develop equal to the following:
- (i) for two D1 Training Facilities, $89,500;
- (ii) for three D1 Training Facilities, $119,000;
- (iii) for four D1 Training Facilities, $148,000;
- (iv) for five D1 Training Facilities, $175,000;
- (v) for six D1 Training Facilities, $201,000;
- (vi) for seven D1 Training Facilities, $224,500;
- (vii) for eight D1 Training Facilities, $246,000;
- (viii) for nine D1 Training Facilities, $265,000; and
- (ix) for ten D1 Training Facilities, $284,000.
- D1 Training fully earns the Development Fee when you pay it, it must be paid in one lump sum, and it is not refundable.
3. Grand Opening Fee: $29,500
- When you sign a letter of intent or comparable document for your Business’s Premises, you will pay D1 Training a grand opening fee of $29,500 (the “Grand Opening Fee”) in a lump sum.
- The Grand Opening Fee covers the costs of the assistance D1 Training provides in your market leading up to your opening. This fee is uniform and non-refundable.
4. Royalty: 7% of Gross Sales, subject to a $12,500 rolling 12-month minimum after the 1st 12 months of operation
- Due Date: Monthly.
- “Gross Sales” is all revenue generated from operating your Business (whether or not in compliance with the Franchise Agreement), whether from cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions, including any revenue derived from the sublease of any portion of the Premises and sponsorship revenue received by or allocated to your Business, but excluding:
- (1) all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority,
- (2) the amount of any documented refunds, and
- (3) the amount of any credits and discounts that D1 Training approves and that your Business in good faith gives to customers and your employees.
- Gift certificate, gift card, or similar program payments are included in Gross Sales at the time of redemption.
- Gross Sales also include all insurance proceeds you receive to replace revenue that you lose from the interruption of your Business due to a casualty or similar event.
5. Marketing Fund: $250
- Due Date: Monthly.
- The Marketing Fund is used to promote the Marks, patronage of D1 Training Facilities, and the D1 brand generally. D1 Training has broad discretion with respect to how it spends the contributions.
- It reserves the right to increase your contributions to the Marketing Fund up to 2% of your Gross Sales.
6. Local Advertising Cooperative: not to exceed 1.5% of Gross Sales without approval of the local advertising cooperative
- Due Date: Monthly.
- If a local advertising cooperative is formed in your geographic region, your contribution may increase if the members of the local advertising cooperative approve a higher percentage according to the bylaws adopted by the local advertising cooperative.
- D1 Training reserves the right to collect your local advertising cooperative contributions on behalf of the local advertising cooperative.
- As of the Issue Date of the current Disclosure Document, D1 Training has not yet formed any cooperatives. In the event it does so, D1 Training Facilities that D1 Training or its affiliates own (except for those that were already under a management agreement with D1 Training or an affiliate as of May 14, 2015) and that are located within the area covered by the local advertising cooperative will contribute to the cooperative on the same basis on which you contribute.
7. Inventory Replenishment: will vary based on amount of inventory purchased
- Due Date: As incurred.
- You will purchase from D1 Training or its affiliates replenishment of your resale inventory of D1-branded apparel, and such other inventory items as D1 Training periodically may require you to purchase from it.
8. Interest on Late Payment: the lower of 18% per annum or the maximum rate allowed by law
- Due Date: As incurred.
- Owed only on amounts not paid by their due dates.
9. Bad Payment Fee: $100 per occurrence
- Due Date: As incurred.
- Owed only if checks returned or ACH requests declined due to insufficient funds or returned for other reasons.
10. Non-Compliance Fee: $1,000 for the third infraction, $5,000 for the fourth infraction
- Due Date: As incurred.
- Payable in the same manner as your Royalty.
- Please be advised that D1 Training does not currently impose a fee for your first or second infractions.
11. Transfer Fee – Franchise Agreement: $7,500
- Due Date: As incurred.
- Payable as a condition of D1 Training’s approval of a transfer.
12. Transfer Fee – Area Development Agreement: $15,000
- Due Date: As incurred.
- Payable as a condition of D1 Training’s approval of a transfer.
13. Transfer Review Fee – Area Development Agreement: will vary under circumstances
- Due Date: As incurred.
- For D1 Training’s expenses incurred with a transfer, whether or not such transfer occurs.
14. Renewal Fee: $15,000
- Due Date: Upon renewal.
- Paid in lieu of an initial franchise fee on renewal of the Franchise Agreement.
15. Inspection and Audit Fee: estimated to be between $15,000 to $20,000
- Due Date: Within 15 days of receipt of report.
- Reimbursement of costs of audit or inspection of your records, but only if audit or inspection was triggered by your failure to provide required reports or if D1 Training discovers underreporting of Gross Sales by more than 3%.
16. Management Fee: 3% of Gross Sales, plus costs and expenses
- Due Date: As incurred.
- Payable only if D1 Training assumes management of your Business due to your death, disability, abandonment, or failure to cure defaults of the Franchise Agreement within the specified cure period.
17. Additional Training: currently, $500 per day
- Due Date: As incurred.
- Payable only if you request and D1 Training agrees to provide training or assistance beyond the initial training program.
- Actual costs will be D1 Training’s then-current per diem, which may be more than its current per diem. If D1 Training provides the training at your Premises, you will also pay D1 Training’s travel expenses.
18. Annual Conference Fee: estimated to be $1,000
- Due Date: At time of registration.
- This covers the registration fee for attendance at the annual conference for 2 people.
19. Operations Manual Replacement Fee: $1,000 per manual
- Due Date: As incurred.
- This covers the cost to replace your Operations Manual if you lose your copy.
20. Online Enrollment Fee: $5 per enrollment
- Due Date: Monthly.
- For each customer that enters into an enrollment agreement with you online, you will pay D1 Training this fee.
21. Remodel Fee: estimated to be $3,000
- Due Date: As incurred.
- You must reimburse the expenses D1 Training incurs for its review of your proposed remodel design and final walk-through of the premises once the remodel is complete.
22. Relocation Fee: $10,000
- Due Date: As incurred.
- You are not granted the right to relocate your Business; however, if you request D1 Training’s approval of a relocation, D1 Training will charge you a fee for its review and approval of your request.
- The amount shown is the current fee D1 Training expects to charge, but it is subject to change.
23. Non-Solicitation Violation: 200% of annual salary
- Due Date: As incurred.
- Payable only if you solicit or hire employees in violation of the non-solicitation restrictions in your Franchise Agreement; based on the annual salary of such persons.
24. Vendor or Equipment Testing Fees: estimated to be $1,500 to $2,000
- Due Date: As incurred.
- If you ask D1 Training to approve, and it agrees to evaluate, a specific vendor or non-compliant or non-sanctioned equipment, D1 Training may require you to reimburse it the costs it incurs in evaluating that vendor or equipment.
25. Insurance: estimated to be $2,500 to $5,000
- Due Date: As incurred.
- Payable to D1 Training only if you fail to obtain and maintain required insurance, and D1 Training, at its option, obtains or reinstates the insurance for you.
- You reimburse D1 Training for the cost of the insurance plus a reasonable fee for its services and its out of pocket expenses.
26. Indemnification: will vary under circumstances
- Due Date: As incurred.
- Under the Franchise Agreement and Area Development Agreement, payable only if an indemnifiable claim is asserted against D1 Training and certain related parties, arising out of your Business’s operations.
27. Costs and Attorneys’ Fees: will vary under circumstances
- Due Date: As incurred.
- Payable only if you do not comply with the Franchise Agreement and D1 Training is the prevailing party in any relevant litigation or arbitration.
28. Liquidated Damages: will vary under circumstances
- Due Date: As incurred.
- Payable only if D1 Training terminates the Franchise Agreement for your default or if you abandon your Business. Amount equals the greater of (i) $72,000 or (ii) the net present value of the Royalty, Marketing Fund contributions, and Local Advertising Cooperative contributions that would have been due had the Franchise Agreement not been terminated, through the 2 years following termination.
- Calculations based on Gross Sales of your Business for the 12 months preceding termination (subject also to minimum Royalty requirements), or if your Business has not been in operation for at least 12 months, the average monthly gross sales of all D1 Training Facilities during D1 Training’s fiscal year immediately preceding termination.
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