Considering a Cinch I.T. Franchise? Don’t Overlook These 28 Important Franchise Fees

If you are considering a Cinch I.T. 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 Cinch I.T.’s 2020 FDD).

1.  Franchise Fee:  $15,000

• The Franchise Fee is $15,000. You must pay the Franchise Fee in a lump sum when you sign the Franchise Agreement.

• Cinch I.T. offers a veteran initiative program. Under this program, honorably discharged veterans of the United States armed forces and their spouses receive a 50% discount on Cinch I.T.’s then-current Franchise Fee for each Cinch I.T. franchise.

2.  Initial Training Fee:  $30,000

• You must pay Cinch I.T. an Initial Training Fee of $30,000 in a lump sum when you sign the Franchise Agreement. The Initial Training Fee provides training for one person.

3.  Multi-Unit Development Fee:  sum of the Initial Franchise Fee due for each Franchised Business that you agree to develop

• If you enter into a Development Agreement, you must pay Cinch I.T. a development fee equal to the sum of the Initial Franchise Fee due for each Franchised Business that you agree to develop (the “Development Fee”).

• The Development Fee will be credited towards the Initial Franchise Fee for each Cinch I.T. Franchised Business developed pursuant to the Development Agreement.

• You must pay the Development Fee in a lump sum when you sign the Development Agreement. The Development Fee is not refundable.

4.  Multi-Unit Initial Training Fee:  $30,000

• Under the Development Agreement, you must pay to Cinch I.T. an Initial Training Fee of $30,000 in a lump sum for the first Cinch I.T. Franchised Business when you sign the first Cinch I.T. Franchise Agreement.

• For your second Cinch I.T. Franchised Business, you will pay Cinch I.T. the then-current Initial Training Fee discounted by 25%.

• For the third or subsequent Cinch I.T. Franchised Business, you will pay Cinch I.T. the then-current Initial Training Fee discounted by 50%.

• You must pay each Initial Training Fee in a lump sum at the time you sign each Franchise Agreement. The Initial Training Fee is not refundable.

5.  Marketing Starter Package:  $4,000

• When you sign the Franchise Agreement, you will pay Cinch I.T. $4,000 for your Marketing Starter Package, which consists of business cards, promotional boxes, cybersecurity packets, presentation packets, referral cards, letterhead, and envelopes.

• All initial fees are uniform to all franchisees and fully earned and non-refundable when paid. You pay Cinch I.T. or its affiliates no other fees or payments for services or goods before your Franchised Business opens.

6.  Royalty Fee:  5% to 7% of Gross Sales or Minimum Royalty, whichever is greater

• Due Date:  15th day of each month, or other day of the month Cinch I.T. designates periodically, by automatic debit/Electronic Funds Transfer (EFT).

• Royalty for the first 6 months following the execution of your Franchise Agreement is not subject to any Minimum Royalty payments.

• Interest is charged on late payments.

7.  Minimum Royalty Fee:  Months 1-6: $0; Months 7-12: $500; Months 13-24: $750; Months 25-60: $1,000

• Due Date:  Same as Royalty Fee.

• Monthly Minimum Royalty Fees begin the 7th month after you sign the Franchise Agreement.

8.  Marketing Fund Fee:  1.5% of Gross Sales or $200, whichever is greater

• Due Date:  Same as Royalty Fee.

• You must pay to the System’s Marketing Fund a monthly fee in an amount equal to 1.5% of your Gross Sales for the preceding month, or the monthly minimum of $200, whichever is greater.

• Interest is charged on late payments.

9.  Additional Trainees Attending Initial Training:  $15,000 per person per module

• Due Date:  As incurred.

• Charge is for any additional people trained by Cinch I.T. You are responsible for all expenses related to Initial Training.

• This Training Fee is subject to change with or without notice.

10.  On-Site Training and Coaching:  $100 per hour or then-current rate, plus travel and living expenses

• Due Date:  As incurred.

• Subject to availability of the trainer.

• This Training Fee is subject to change with or without notice.

11.  Remedial Training:  $100 per hour or then-current rate, plus travel and living expenses

• Due Date:  On demand.

• If you fail to meet Cinch I.T.’s Minimum Performance Standards, you must participate in Cinch I.T.’s Performance Improvement Plan for 3 months.

• You are responsible for all travel and living expenses related to this training.

• This Training Fee is subject to change with or without notice.

12.  Software Fee:  $250 per person per month

• Due Date:  Same as Royalty Fee.

• Payable to Cinch I.T. or its designee, Cinch HD.

• Cinch HD will provide you and each of your employees with the software needed to run your business.

13.  Product and Marketing Materials:  varies based on items and quantity ordered

• Due Date:  At time of purchase.

• You must buy products and marketing materials that (i) meet Cinch I.T.’s standards and specifications and (ii) are purchased from suppliers designated or approved by Cinch I.T.

• Cinch I.T. reserves the right to designate itself or its affiliates as the exclusive supplier for certain products and marketing materials.

14.  Helpdesk Client Managed Services:  monthly fees range between $5 and $90 based on service provided, number of users, and equipment supported

• Due Date:  15th day of each month, or other day of the month Cinch I.T. periodically designates, by EFT.

• Payable to Cinch I.T. or its designee, Cinch HD.

• Cinch I.T. reserves the right to adjust this fee.

15.  Product Testing Fee:  the greater of $500 or the actual cost of Cinch I.T.’s review and/or inspection, including the actual cost of laboratory fees, professional fees, and travel and living expenses, as well as any other fees Cinch I.T. pays to third parties

• Due Date:  When billed.

16.  Failure to Maintain Insurance:  cost of insurance and, if not obtained by you, Cinch I.T.’s procurement expense

• Due Date:  As required and as incurred.

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

17.  Annual Conference Registration Fee:  up to $700 per person

• Due Date:  On demand.

• You must pay Cinch I.T. a registration fee, which Cinch I.T. expects will not be more than $700 per person, for attending its annual conference.

• Cinch I.T. requires you (or your Operating Principal) and/or your general manager to attend each conference.

• You will be responsible for all travel and living expenses incurred by you and your personnel for attendance at the annual conference.

18.  Client Complaints:  reimbursement of Cinch I.T.’s time and expenses, plus any compensation paid to client

• Due Date:  As incurred.

• If Cinch I.T. steps in to resolve a complaint from one of your clients, you must pay Cinch I.T. for its time and any compensation (i.e., replacement product) given to clients.

19.  Audits:  cost of audit, plus interest on underpayment

• Due Date:  As incurred.

• Payable only if audit shows understatement is willful or if 2% or more of gross sales for a two-month period.

20.  Interest:  interest on overdue payment

• Due Date:  As incurred.

• Interest rate will be 1.5% per month or if the maximum interest rate permitted by state law is less, then interest will be charged at the lesser allowed rate.

• Interest begins from the date payment was due.

21.  Late Fee:  $100 per occurrence, plus interest

• Due Date:  On demand, but only if you are delinquent in your payments to Cinch I.T. or otherwise violate an obligation under the Franchise Agreement.

• Payable the day after payment or other event (e.g. a required report) is due, in addition to the interest.

22.  Transfer, Assignment:  $10,000

• Due Date:  Time of transfer.

• Payable if you sell your franchise. No fee charged if you transfer the franchise to a corporation or other entity you control.

23.  Transfer Fee – Development Agreement:  $5,000 for each unopened franchise; $10,000 for each open and operating Franchised Business

• Due Date:  Time of transfer.

• Payable if Multi-Unit Developer sells its franchise.

• No fee charged if you transfer franchise to a corporation or other entity you control.

24.  Multi-Unit Extension Fee – Development Agreement:  $5,000 per extension

• Due Date:  As incurred.

• Payable if Multi-Unit Developer desires to extend a Development Period.

25.  Renewal:  $5,000

• Due Date:  Time of renewal.

• New Franchise Agreement, which may have different terms or conditions, must be signed by you and Cinch I.T.

• You may be required to attend training classes.

26.  Costs and Attorneys’ Fees:  cost of collection and attorneys’ fees

• Due Date:  As incurred.

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

27.  Indemnification:  cost of liability

• Due Date:  As incurred.

• You must indemnify and hold Cinch I.T. harmless against any claims, losses, costs, expenses, liabilities, and damages, including costs and attorneys’ fees arising from the operation of your Franchised Business.

28.  Liquidated Damages:  will vary under the circumstances

• Due Date:  If Franchise Agreement is terminated as a result of your default.

• A lump sum equal to the value of the Royalty and Marketing Fees that you would have paid for the remainder of the term.