If you are considering a Slim Chickens franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Slim Chickens’ 2021 FDD).
1. Initial Franchise Fee: $20,000
- If you do not sign a Development Agreement, you must pay Slim Chickens an initial franchise fee of $20,000 at the time you sign the Franchise Agreement.
- Slim Chickens normally requires new franchisees to sign a Development Agreement to develop and operate multiple Restaurants unless it authorizes you to develop a single Restaurant at a site it pre-approves before you sign the Franchise Agreement.
2. Territory Fee: $15,000 multiplied by the total number of Restaurants you will develop under the Development Agreement
- When you sign the Development Agreement, you must pay Slim Chickens a territory fee equal to the sum of $15,000 multiplied by the total number of Restaurants you will develop under the Development Agreement.
- Slim Chickens does not require any specific minimum or maximum number of Restaurants to be developed under the Development Agreement.
- You will normally sign the Franchise Agreement for your first Restaurant either before you appear for initial training or when you start construction for your first Restaurant.
- You will sign the Franchise Agreements and pay the initial franchise fees for the second and each additional Restaurant to be developed under the Development Agreement before you start construction on each Restaurant.
- The initial franchise fee and territory fee are uniformly imposed and are not refundable.
3. Royalty Fee: 5% of Gross Sales
- Due Date: Payable weekly.
4. Advertising Fund Contribution: 2% of Gross Sales
- Due Date: Payable weekly.
- You pay the Advertising Fund Contribution directly to Slim Chickens.
5. Local Ad Expenditure/Local Advertising Cooperative Contribution: 1% of Gross Sales
- Due Date: Payable weekly.
- You must spend an amount equal to the Local Ad Expenditure yourself on approved marketing, but Slim Chickens may require you to pay some or all of the Local Ad Expenditure to an approved Advertising Cooperative for regional or local advertising.
- In no case will you pay more than 1% as the Local Ad Expenditure or an Advertising Cooperative payment.
6. Grand Opening Advertising: $10,000
- Due Date: As incurred.
- You must spend this amount on advertising the grand opening of the Restaurant.
7. Development Extension Fee: $5,000 for a single 75-day extension
- Due Date: 15 days before an expiration date under your Development Schedule.
- Payable if you are behind on your Development Schedule and desire up to a 75-day extension.
8. Transfer of Development Agreement: $10,000 plus reimbursement of Slim Chickens’ actual costs
- Due Date: Prior to consummation of transfer.
- Payable by you or your assignee when you sell your development rights. There is no charge if the assignee is a corporation formed by you for the convenience of ownership in which you are the sole shareholder.
9. Transfer of Franchise Agreement: $5,000 plus reimbursement of Slim Chickens’ actual costs
- Due Date: Prior to consummation of transfer.
- Payable by you or your assignee when you sell your franchise.
- There is no transfer fee if the assignee is a corporation formed by you for the convenience of ownership in which you are the sole shareholder, but you must still reimburse Slim Chickens for its costs in documenting the transfer.
10. Renewal Fee for Franchise Agreement: 25% of then-current initial franchise fee
- Due Date: Prior to renewal after initial 10-year term.
- Payable by you upon execution of the renewal Franchise Agreement.
11. Cost of Plan Revisions: cost of revisions, ranging from $100 to $1,500
- Due Date: As incurred.
- If you make any revisions to your initial construction plans, you are responsible for the cost of those revisions.
12. Interest on Late Payments: an amount equal to the lesser of 1.5% of overdue balance or the maximum rate allowed by law
- Due Date: Upon payment of monies owed.
- Interest is charged on all late payments to Slim Chickens.
13. Audit: cost of audit
- Due Date: As incurred.
- Payable only if audit shows understatement of 2% or more of Gross Sales.
14. Customer Service Response Program: cost of program, ranging from $50 to $200 per month
- Due Date: Monthly as incurred.
- If Slim Chickens requires you to participate in a Customer Service Response Program, you will pay a monthly fee to the provider.
15. App and Reward Programs: then-current amount, currently $115 per month
- Due Date: Monthly as incurred.
- You will pay a monthly fee to Slim Chickens’ then-current provider for app and reward programs.
16. OLO Online Ordering: then-current amounts, currently $100 initial activation fee, plus $50 monthly fee, plus transaction fees (currently averaging about $200 per month)
- Due Date: Monthly as incurred.
- Slim Chickens is currently using OLO for online ordering.
- You must pay the third-party vendor an initial fee, a monthly fee, and individual transaction fees.
17. Attorney’s Fees and Costs: all amounts incurred in collection efforts
- Due Date: As incurred.
- You must pay Slim Chickens’ attorney’s fees and costs incurred in collecting any money you owe to Slim Chickens or for enforcement of the Agreement.
18. Relocation Fee: $5,000
- Due Date: As incurred.
- Payable if Slim Chickens allows you to relocate your Restaurant.
19. Franchisee Offering Fee: $5,000 plus costs and expenses
- Due Date: As incurred.
- Payable if Slim Chickens allows you to engage in a securities offering.
20. New Product or Service Testing Reimbursement: an amount necessary to reimburse Slim Chickens for its reasonable cost of inspection and the actual cost of testing a potential new product or service
- Due Date: As incurred.
- Payable by you or your proposed supplier for an unapproved good or service that you want to use in your Restaurant.
Leave a Reply