If you are considering an Expense Reduction Analysts franchise, don’t get blindsided by these 16 important franchise fees (from the initial franchise fee, to the royalty fee, to 14 other fees found in Items 5 and 6 of Expense Reduction Analysts’ 2020 FDD).
1. Initial Franchise Fee: $59,900
- The Initial Franchise Fee is $59,900 and is due in immediately available U.S. funds when you sign the Franchise Agreement.
- The Initial Franchise Fee is not refundable and is uniform for all franchisees, except those sold under the VetFran initiative. Expense Reduction Analysts proudly offers VetFran qualified veterans a discount of $5,000 off the Initial Franchise Fee.
2. Royalty Fee: Royalty Fee is the greater of: (i) 15% of annual Net Cumulative Receipts for the immediately preceding calendar month; or (ii) the applicable minimum royalty fee (the “Minimum Royalty Fee”)
- Due Date: Monthly.
- Your Minimum Royalty Fee will amount to (a) $1,000 per month for the first 36 months after the commencement date (“Commencement Date”), and (b) $1,250 per month thereafter during the remaining periods of your initial term under the Franchise Agreement.
3. Marketing Fund Contributions: 3% of annual Net Cumulative Receipts
- Due Date: Monthly.
- Payable to Expense Reduction Analysts and deducted from the Net Cumulative Receipts.
4. Renewal Fee: $5,000
- Due Date: Upon signing renewal agreement.
5. Transfer Fee: $5,000
- Due Date: Upon approval of transfer.
6. Interest on Late Payments: 1% per month
- Due Date: Upon invoice.
- Interest accrues daily, may be capitalized by Expense Reduction Analysts and is payable on demand.
7. Technology Fee: Expense Reduction Analysts’ then-current fee. Currently, $1,000 per year.
- Due Date: Monthly or annually (on the date Expense Reduction Analysts specifies in writing).
- You will receive one Expense Reduction Analysts Management Information System account in connection with your Consulting Business.
8. Training and Coaching Fee: Expense Reduction Analysts’ then-current training fee, which will vary based upon type of training and trainees (the “Training Fee”). Currently, $10,000 per each additional or substitute owner to receive initial training. Currently, a subsidized fee of $5,000 per each additional or replacement Practice Model Consultant to receive the required initial training. Currently, $700 per day for all other training or coaching.
- Due Date: Before training.
- Expense Reduction Analysts does not charge any Training Fees to provide you or your Designated Principal with required initial training.
- Expense Reduction Analysts reserves the right to charge the applicable then-current Training Fee in connection with (a) required initial training, (b) Remedial Training, and/or (c) further training Expense Reduction Analysts elects to provide to you (and/or your employees) upon your request.
9. Regional Meetings and Annual National Conference: incidental costs for transportation, lodging, and meals
- Due Date: As incurred.
- You and your Designated Principal or Practice Model Consultants must attend Expense Reduction Analysts’ National Conference, at your sole cost and expense.
10. Cost of Audit: Expense Reduction Analysts’ out-of-pocket expense
- Due Date: Upon invoice.
- You pay Expense Reduction Analysts’ cost of audit only if the audit showed that your Net Cumulative Receipts were understated by 2% or more, or if the audit was necessary because you did not submit required financial reports to Expense Reduction Analysts.
11. National Conference Registration Fee: Expense Reduction Analysts’ then-current fee, which shall not exceed $1,000 per attendee
- Due Date: Monthly installments in advance, latest upon registration.
- Your registration fee does not include your costs to attend the conference, such as transportation, lodging, and meals. Those costs are your responsibility. You will pay this fee regardless of whether you attend.
12. Additional IT Accounts: Expense Reduction Analysts’ then-current fee for each additional IT user account: (i) “Admin” Level – currently $25.00 per month per user for all software applications and helpdesk support to operate the standard administrative functions of “Back-Office Personnel” Staff; (ii) “Consultant” Level – currently $62.50 per month per user for all software applications and helpdesk support to operate the standard consulting functions of “Practice Model Consultant” Staff; (iii) “Franchisee” Level – currently $83.33 per month per user for all software applications and helpdesk support to operate the functions as the franchise owner.
- Due Date: Upon invoice; monthly, quarterly, or annually in advance.
- You will receive one IT account in connection with your Consulting Business. You will be charged for each additional IT account that Expense Reduction Analysts grants to you upon your request, which may include extra software licenses, setup costs, and monthly user fees (collectively, the “Technology Fees”).
13. Taxes on Payments to Expense Reduction Analysts: amount of tax or assessment
- Due Date: When imposed by taxing authority.
- If any taxing authority, wherever located, imposes any future tax, levy, or assessment on any payment you make to Expense Reduction Analysts, in addition to all payments due to Expense Reduction Analysts, you must pay the tax, levy, or assessment.
14. Insurance: will vary according to circumstances
- Due Date: Upon demand.
- If you fail to obtain required insurance, Expense Reduction Analysts may obtain such insurance at your expense (but is not required to do so) and charge you a service fee to do so. Otherwise, these payments are made directly to your third-party insurance provider.
- You must name Expense Reduction Analysts and any Approved Supplier it designates as an additional insured.
15. Indemnification: amount of claim or judgment
- Due Date: When incurred.
- You must reimburse Expense Reduction Analysts for its attorneys’ fees and other costs that it incurs in connection with any third-party claims brought against it that arise out of, or are related to, the operation of your Consulting Business.
16. Audit Fees: actual cost of audit
- Due Date: Within 30 days of invoice.
- Payable if audit reveals that you have underreported the Gross Revenue of your Consulting Business by 2% or more.