Considering a Donatos Pizza Franchise? Don’t Overlook These 24 Important Franchise Fees

If you are considering a Donatos Pizza franchise, don’t get blindsided by these 24 important franchise fees (from the initial franchise fee, to the royalty fee, to 22 other fees found in Items 5 and 6 of Donatos Pizza’s 2020 FDD).

1.  Initial Franchise Fee:  $30,000

• You will pay Donatos a non-refundable initial franchise fee when you sign the Franchise Agreement for each Restaurant you choose to develop. Your Initial Franchise Fee is $30,000 (the “Initial Franchise Fee”).

• This Initial Franchise Fee is uniform among all franchisees opening a traditional Donatos Pizza Restaurant. The Initial Franchise Fee is non-refundable and is fully earned by Donatos when paid.

2.  Donatos Manager Fee:  $25,000

• Neither you nor any of your affiliates may hire any of Donatos’ or its affiliate’s assistant general managers, regional managers, or district supervisors (each a “Donatos Manager”) to work for you or your affiliate without Donatos’ approval. If Donatos does approve, you must pay Donatos $25,000 to partially cover its and its affiliate’s cost to locate and retrain the Donatos Manager’s replacement.

3.  Software License Agreement:  $4,500

• When you open a new Donatos Pizza Restaurant, then you will license the TRIO Software from Donatos. You must execute the TRIO System Standard Software License Agreement  for use of the software in your Restaurant and you shall pay Donatos a one-time license fee of $4,500 prior to installation, which is prior to the grand opening of your Restaurant.

4.  Computer System:  $16,000 to $21,000

• When you open a new Donatos Pizza Restaurant, you are required to use Donatos’ specified Computer System to operate the Restaurant. The overall cost of the entire Computer System ranges between $16,000 and $21,000, depending upon the size of your Restaurant.

5.  Development Fee:  100% of the Initial Franchise Fee ($30,000) for the first Restaurant to be developed plus 50% of the Initial Franchise Fee ($15,000) for each additional Restaurant to be developed under the Development Rights Agreement

• When you sign a Development Rights Agreement, you must pay Donatos a development fee equal to 100% of the Initial Franchise Fee ($30,000) for the first Restaurant to be developed plus 50% of the Initial Franchise Fee ($15,000) for each additional Restaurant to be developed thereunder (the “Development Fee”).

• The Development Fee, which is not refundable under any circumstances and is fully earned by Donatos when it is paid, is due in full when you sign a Development Rights Agreement.

• Donatos will apply $15,000 towards each Initial Franchise Fee then-charged under each Franchise Agreement after the first (which may be a different amount than the current Initial Franchise Fee of $30,000) you enter into between you and Donatos under the Development Rights Agreement.

6.  Licensing Fee:  5% of Net Sales

• Due Date:  Due on the payment day of each week.

• Based on Net Sales during the previous week.

• This fee covers, among other things, use of Donatos’ Marks and operating system.

7.  National Marketing Fund Contribution:  up to 4% (currently 0.75%) of Net Sales

• Due Date:  Due on the payment day of each week.

• Based on Net Sales during the previous week.

• At a minimum, you are required to spend a total of 5% of your Net Sales each calendar quarter on advertising, marketing,  and promotion of your Restaurant (the “Marketing Spending Requirement”). Donatos will apply your National Marketing Fund contribution to the minimum Marketing Spending Requirement.

8.  Proprietary Computer Software Maintenance and Support:  currently $200 per month, but could increase if Donatos’ costs increase

• Due Date:  Due on the 10th day of each month.

• This fee covers software bug fixes, upgrades, updates, and Donatos’ helpdesk support.

• Donatos may charge reasonable fees for software, other technology, and other maintenance and support services at the rate it uniformly charges to other Donatos Pizza Restaurants.

9.  Miscellaneous Computer Software Fees:  Donatos’ then-current charges, based on the project or task involved

• Due Date:  As incurred.

• Applies if: (1) Donatos performs service which was not the result of a programming error, (2) Donatos must re-install the software, or (3) Donatos makes software corrections for difficulties or defects traceable to your errors or your computer system.

10.  Reimbursement of Upgrading and Maintenance Costs:  Donatos’ costs and expenses, plus 15% administrative fee, plus interest if applicable

• Due Date:  Within 5 days after receiving Donatos’ invoice.

• If you fail to maintain the Restaurant’s (and its assets’) condition and appearance, Donatos may arrange for any necessary cleaning, upgrades, remodeling, decorating, repairs, or maintenance.

11.  Cooperative Advertising:  typically between 1% and 4% of Net Sales (Advertising Cooperative members establish exact amount)

• Due Date:  Established by Advertising Cooperative members.

• Donatos may form or already have formed an Advertising Cooperative in your area.

• Contribution levels are subject to Donatos’ approval.

12.  Additional Training or Assistance:  currently, $300 per person per day plus expenses, but could increase if Donatos’ costs increase

• Due Date:  As incurred.

• Applies only to training newly-hired associates; additional or refresher training courses, periodic conventions, and programs; and additional or special assistance or training that you or your associates need or request.

• Cost of additional training depends on training required and experience level of trainer.

• Donatos also may charge its costs for updated, additional, or refresher training materials.

13.  Training Fee:  lesser of (i) $15,000, or (ii) Donatos’ actual costs and expenses associated with providing the Opening Training

• Due Date:  Lump sum, as incurred.

• Donatos provides the Opening Training to you at no additional costs for your first Restaurant. This fee is due only if (i) this is your second Restaurant, or (ii) this is not your first or second Restaurant but you desire to receive the Opening Training.

• You must pay Donatos the Training Fee within 15 days of Donatos’ final calculation of such fee.

14.  Transfer:  $0 to $15,000

• Due Date:  Before transfer completed.

• $15,000 due upon transfer of Franchise Agreement or controlling ownership interest in business entity franchisee to a new owner or partner.

• $2,500 due upon transfer of Franchise Agreement for controlling ownership interest in business entity franchisee to an existing franchise owner.

• No charge if agreement transferred to or among family members or to an entity which you own and control, but Donatos may pass along its costs.

15.  Audit:  cost of inspection or audit

• Due Date:  As incurred.

• Due only if you do not give Donatos reports, supporting records, or other required information on time or understate required Licensing Fee or National Marketing Fund contributions by more than 2%.

16.  Interest:  lesser of 1.5% per month or highest commercial contract interest rate law allows

• Due Date:  As incurred.

• Due on all overdue amounts more than 7 days late.

17.  Insufficient Funds Charge:  Donatos’ out-of-pocket expenses

• Due Date:  As incurred.

• Due only if your account has insufficient funds to cover check or debit.

18.  Product and Service Purchases

• You will buy products and services from Donatos, its affiliates, suppliers that Donatos designates or approves, and vendors whose items meet Donatos’ standards and specifications.

19.  Management Fee:  up to 8% of Net Sales, plus costs and expenses

• Due Date:  As incurred.

• Due if Donatos manages Restaurant after your death or disability.

20.  Costs and Attorneys’ Fees:  will vary with circumstances

• Due Date:  As incurred.

• Due only if you do not comply with the Franchise Agreement or Development Rights Agreement.

21.  Indemnification:  will vary with circumstances

• Due Date:  As incurred.

• You must reimburse Donatos if it incurs costs from the Restaurant’s operation; your business; your breach of the Franchise Agreement, Development Rights Agreement, or Confidentiality Agreement; or noncompliance or alleged noncompliance with any law concerning the Restaurant’s construction, design, or operation.

22.  Online Ordering Transaction Fee:  $0.25 to $0.50 per order placed online for your Restaurant

• Due Date:  Due on the payment day of each week.

• Donatos charges you a transaction fee for customer orders made or placed through its System Website which are then fulfilled by your Restaurant to cover a portion of Donatos’ cost and expense in processing such payments (the “Online Order Fee”).

• Currently, the fee is $0.25 per order, but Donatos reserves the right to increase the fee to $0.50 per order.

23.  New Product or Supplier Testing:  cost of testing

• Due Date:  As incurred.

• This covers the costs of testing new products or inspecting new suppliers you propose (if Donatos agrees to the test).

24.  Insurance:  actual cost of premiums, plus 20%

• Due Date:  As incurred.

• Payable to Donatos only if you do not maintain the insurance Donatos requires for the Restaurant and Donatos elects to do so for you.