Considering an N-Hance Franchise? Don’t Overlook These 32 Important Franchise Fees

If you are considering an N-Hance franchise, don’t get blindsided by these 32 important franchise fees (from the initial franchise fee, to the royalty fee, to 30 other fees found in Items 5 and 6 of N-Hance’s 2019 FDD).

1.  Initial License Fee:  $3,000, plus $1,000 per 8,000 persons located in the Franchised Area

• In 2018, the Initial License Fee N-Hance charged for Package One (for your first N-Hance Business franchise) ranged from $13,259 to $46,028.

2.  Initial Product, Equipment, and Marketing Resource Packages (collectively referred to as the “New Business Set”):  totaling $34,000, as follows:

• a.  Equipment and Product Package Fee of $11,000, which includes a Lightspeed Launch Kit, HVLP spray system, a buffer with various pads, a vacuum, hand tools, wood cleaner, proprietary finishes, dyes, stains, patching materials; and

• b. Marketing and Operations Package Fee of $23,000, which includes computer software, van decals, advertising resources, the cost of 2 people to attend the first national convention following the signing of your Franchise Agreement, and other assorted supplies.

3.  Royalty:  the greater of (1) 2% of your Gross Revenue or (2) the Minimum Monthly Royalty

• Due Date:  10th day of month.

• For your Initial Franchise Acquisition, N-Hance usually sets the start date as the first month following completion of the New Buyer Training program.

• For additional franchise acquisition, payments generally begin the month after you sign the Franchise Agreement.

• This fee must be paid via electronic transfer.

4.  Yearly Minimum Purchase Amount:  $4,000

• Due Date:  As incurred.

• You must purchase a minimum of $4,000 (subject to an annual CPI increase) of proprietary products from N-Hance or its parent company each calendar year for each franchise license you own.

5.  Customer Relationship Management Software Fee:  $80 to $120 per month; $200 data import fee

• Due Date:  As incurred.

• You are required to use N-Hance’s web-based customer management System in the operation of the Business.

• Existing franchisees must pay $200 to import their existing database.

6.  Non-Reporting Fee:  $300

• Due Date:  As incurred.

• Payable each month you do not provide the required reports in the manner prescribed by N-Hance; repeatedly not providing the required reports could result in further action.

7.  Brand Marketing Fund Contribution:  $200 to $400

• Due Date:  Monthly.

• Your contributions to the BMF will be due on the 25th of each month beginning the same month your first Franchise Royalty payment is due.

• Subject to an increase upon 30 days’ notice from N-Hance.

8.  National Accounts Program Handling & Processing Fee:  currently 10% to 25% of invoice total

• Due Date:  As incurred.

• N-Hance or its parent company remits to you all of the payments received from completed national accounts jobs (including THD jobs) minus this handling and processing fee.

• This fee can vary between National Accounts.

9.  Catalyst Out-of-Area Fee:  15% of Invoice Total

• Due Date:  As incurred.

• N-Hance collects this fee on any work you perform outside of your designated area with N-Hance’s permission.

• N-Hance will contribute one-third of the Catalyst Out-of-Area Fee amount collected from each job to the BMF.

• Jobs performed outside of your franchised area without N-Hance’s prior written approval are subject to a fine of at least $5,000 or termination of the Franchise Agreement.

10.  Sub-Site (websites):  $35 per month per site

• Due Date:  10th day of month.

• Development, hosting, and maintenance fees for one franchisee local site.

• Does not include web marketing services.

• The first six months of one sub-site is included in the NBS.

11.  Fine for Improper Advertising:  $2,000 per violation, or termination of the Franchise Agreement

• Due Date:  As incurred.

• Payable if you use any advertising, promotional, or marketing materials not prepared or approved by N-Hance or inconsistent with N-Hance’s current marketing and advertising guidelines.

• Failing to correct issues involving improper advertising could result in the termination of your Franchise Agreement.

12.  Fine for Use and/or Possession of Unapproved Equipment or Products:  $5,000 per occurrence

• Due Date:  As incurred.

• Payable if you use or possess any equipment or product not approved by N-Hance.

• Failing to correct issues involving possession of unapproved equipment or products could result in the termination of your Franchise Agreement.

13.  Fine for Setting an Appointment, Providing a Written Estimate, or Accepting or Performing a Job Outside of Your Franchised Area:  $5,000 or ½ of the total job ticket/invoice amount, whichever is greater, per violation

• Due Date:  As incurred.

• Payable if you set an appointment, provide a written estimate, or accept or perform a job outside of your Franchised Area without N-Hance’s prior written approval.

• Continued violations could result in the termination of your Franchise Agreement.

14.  Fine for Failure to Comply with Annual Training Requirements:  $500 per year, or termination of the Franchise Agreement

• Due Date:  As incurred.

• Payable if you do not attend at least one in-person training event each calendar year or otherwise fail to fulfill annual training requirements.

15.  Transfer:  10% of the sales price, with a minimum of $2,500

• Due Date:  Upon initiation of transfer documentation.

• Due if you propose to completely transfer the Franchise Business or its assets, or if you transfer a portion of the Franchise Business or its assets, with N-Hance’s prior approval, to a prospect introduced to you by N-Hance or its parent company or who had been working with N-Hance or its parent company in the past 18 months (increased not more than once each calendar year to reflect increases in the CPI).

16.  Non-Controlling Interest Transfer:  $1,000

• Due Date:  Upon initiation of transfer documentation.

• Due if you propose to transfer a non-controlling interest in the Franchise Business or its assets.

17.  Successor (Renewal) Fee:  10% of the initial fee, not to exceed $2,500

• Due Date:  Prior to expiration of the initial term.

• Fee that is due at the end of the initial five-year term to acquire a successor Franchise Agreement.

18.  Audit:  cost of inspection or audit

• Due Date:  As incurred.

• Due if you do not provide reports, supporting records, or other required information or understate royalties or any other contribution by more than 2%.

19.  Consolidated Office Agreement Fee:  $150

• Due Date:  As incurred.

• Payable when you wish to have only one office for multiple franchises.

20.  Guarantor Change:  $200

• Due Date:  Beginning of Guarantor Approval Process.

• Payable if you wish to add someone to the Franchise Agreement or corporate franchisee, with N-Hance’s prior approval.

21.  Late Fee and Interest:  one-time fee of $100 and 1.5% per month, not to exceed highest contract rate allowed by law

• Due Date:  15 days after billing.

• Payable on all amounts overdue to N-Hance.

22.  Additional Training:  $100 to $2,500

• Due Date:  Prior to date of training.

• This could include your cost to comply with annual training requirements, the cost of technician training for your employees, and/or any training and certification that may be required to participate in national account programs.

• Costs for such state certification and training are established and provided by third parties and costs will vary by state depending on the type and the location of the course.

• As disclosed above, additional required training can also include, but is not limited to, optional web-based training and attendance at the annual convention.

23.  Credit Card Processing Fee:  will vary

• Due Date:  As incurred.

• Payable on credit card transactions.

• Although N-Hance does not currently mandate a specific provider for this service, N-Hance reserves the right to do so in the future.

24.  Convention Fee:  $1,100 to $1,900

• Due Date:  Prior to convention.

• Registration fee and lodging (one hotel room) for two people to attend the first annual convention following the purchase of your initial N-Hance franchise is included in the New Business Set.

• For existing franchisees, cost can vary depending on when you register.

• You will be required to attend at least two conventions during the term of the Franchise Agreement with the first attendance occurring during the first three years of your Franchise Agreement.

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

• Due Date:  As incurred.

• Payable upon your failure to comply with the Franchise Agreement.

26.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse N-Hance if it is held liable for claims arising from your operations.

27.  Minimum Monthly Marketing by You:  the greater of (1) 8% of your Gross Revenue or (2) a fixed dollar amount

• Due Date:  Monthly.

• You must spend a minimum amount each month on advertising, marketing, and promotional programs for your N-Hance Business.

28.  Customer Complaint Resolution:  will vary under circumstances

• Due Date:  As incurred.

• Payable by you to resolve customer complaints concerning your job performance.

• If N-Hance resolves a customer issue for you, it will charge any amounts that it spends to your account.

29.  Optional Local Email Account:  $50

• Due Date:  Annually.

• Annual fee for business email account using the proprietary nhancelocal service.

• The first year is included in the New Business Set

30.  Optional Web Marketing Services (SEO, PPC, or Social Media Management):  $150 per set-up; $100-$550 per month per program

• Due Date:  10th day of month.

• Service provides ongoing editing and basic maintenance of content on the franchise sites.

31.  Optional Video Customization:  $50 per video. If utilizing on YouTube, $150 initial set-up fee for new channel.

• Due Date:  As incurred.

• This service includes personalizing videos for your N-Hance business, embedding your video on your website, uploading the videos to your YouTube Channel, and adding descriptions, links, and tags.

• If you have a YouTube channel for your N-Hance Business, you do not have to pay the initial set-up fee.

32.  Optional Marketing Package:  $2,000 to $6,000

• Due Date:  As incurred.

• Optional service includes optimizing your directory listings, social media platforms, and website; PPC, social advertising, and partnerships with lead generation sources at an additional cost.

• You can also choose to add various marketing collateral, branded shirts, sample doors, vehicle graphics, and several other a la carte marketing items.