If you are considering The DRIPBaR franchise, don’t get blindsided by these 13 important franchise fees (from the initial franchise fee, to the royalty fee, to 11 other fees found in Items 5 and 6 of The DRIPBaR’s 2020 FDD).
1. Franchise Fee: $55,000
- You must pay DRIPBaR an initial franchise fee of $55,000 (the “Initial Franchise Fee”) in lump sum once you sign the Franchise Agreement. The Initial Franchise Fee is fully earned when paid, and is non-refundable.
- If you are a veteran of the U.S. Armed Forces or a first responder, then DRIPBaR will grant you a discount on its Initial Franchise Fee of $5,000 for your first Franchised Business.
- “Veteran” means honorably discharged from the U.S. Army, Navy, Air Force, Marines, or Coast Guard and can provide proof of veteran or military status by providing a DD214 or military orders.
- “First Responder” means an individual who is trained according to a national standard curriculum set up by the U.S. Department of Transportation to respond to trauma and medical emergencies.
2. Development Fee: $95,000 to $300,000
- When you sign the Multi-Unit Development Agreement, you must pay DRIPBaR a development fee (the “Development Fee”) that is calculated based on the total number of Franchised Businesses you commit to develop under the Multi-Unit Development Agreement.
- The Development Fee will be as follows:
- 2 DRIPBaR Locations: $95,000
- 3 DRIPBaR Locations: $125,000
- 5 DRIPBaR Locations: $175,000
- 10 DRIPBaR Locations: $300,000
- The Development Fee is fully earned by DRIPBaR upon receipt and is not refundable under any circumstances. The Development Fee is calculated uniformly for all Multi-Unit Operators.
- You must sign the Franchise Agreement for the first Franchised Business at the same time you sign the Multi-Unit Development Agreement. The entire Development Fee is payable in full at the time you sign the Multi-Unit Development Agreement.
3. Royalty Fee: 7% of your Gross Sales
- Due Date: Due on the Payment Date of each Accounting Period. Weekly on Sundays.
- “Gross Sales” means all revenue that you receive, directly or indirectly, from operating your Business, including all amounts or other consideration you receive at or away from the Premises, and whether from cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions.
- Gross Sales includes the proceeds of any business interruption insurance or similar insurance. Gross Sales will also include amounts you earn from the sale of any online group-bought deals and the sale of any gift cards or gift certificates in each case calculated using DRIPBaR’s then-current guidelines, which may be based on the redeemed value or sale price of the deals, cards, or certificates.
- Gross Sales does not, however, include any federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority.
- DRIPBaR will require that you provide your profit and loss statements to it on a monthly basis for its review in a manner that it prescribes.
- “Accounting Periods” are each a calendar week. DRIPBaR reserves the right to change the definition and duration of an “Accounting Period” to be monthly or as it otherwise determines.
- Remitted by ACH. Unless otherwise restricted by applicable banking laws and regulations, DRIPBaR will establish a direct debit program with your bank to allow for the ACH draft of the monthly royalty. You will be required to execute any necessary documents authorizing the ACH draft.
- DRIPBaR will automatically debit your bank account by the 10th of each month’s morning for the previous week’s royalties and national marketing contributions. For all fees to be remitted on a national holiday, fees will be due the following business day.
4. General Advertising and Marketing Fee: 1-2% of your Gross Sales
- Due Date: Due on the Payment Date of each Accounting Period. Currently monthly.
- 1% up to 20 units; 2% from 21 units on.
5. Technology Fee: $149
- Due Date: Due monthly.
- Remitted by ACH.
6. Transfer Fee: $5,000
- Due Date: Prior to transfer.
- All transfers must be in accordance with the terms and conditions of the Franchise Agreement and are subject to DRIPBaR’s prior approval.
7. Required Digital Marketing Fee: $320
- Due Date: Due monthly.
- Paid to vendor.
8. Interest on Late Payments: greater of 1.5% or the maximum commercial interest rate allowed by law of the amount due
- Due Date: On demand.
- Applies to any and all past due payments to DRIPBaR.
9. Audit Fee: understated amounts, plus interest, plus amount of audit fees and related expenses
- Due Date: Within 15 days after receiving the examination report.
- Due if you fail to furnish reports DRIPBaR requires or understate your Gross Sales by more than 3%.
10. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You must indemnify DRIPBaR from all losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry (regardless of whether same is reduced to judgment) or any settlement that arises out of or is based upon any of the items listed in the sections of the Franchise Agreement entitled “Indemnification.”
- You must also pay for DRIPBaR’s legal expenses (fees and actual costs) incurred in any matter related to your franchised business and for any damages, costs, and expenses that DRIPBaR incurs enforcing any of the provisions of the Franchise Agreement or as a result of your failure to pay amounts when due.
11. Attorneys’ Fees and Costs: varies
- Due Date: As incurred.
- Applies if DRIPBaR has to enforce the Franchise Agreement due to your breach and in other circumstances.
12. Renewal Fee: 25% of the then-current franchise fee
- Due Date: Due upon signing renewal Franchise Agreement.
- You will be required to pay a nonrefundable renewal fee upon the expiration of the initial term of the Franchise Agreement if you are eligible and elect to renew the Franchise Agreement.
13. Supplier Review Fee: $500
- Due Date: Upon requesting approval of a new supplier, material, or service.