Considering a ShelfGenie Franchise? Don’t Overlook These 28 Important Franchise Fees

If you are considering a ShelfGenie 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 ShelfGenie’s 2021 FDD).

1.  Initial Franchise Fee (Executive Franchise):  $69,500

• If you are entering into a Franchise Agreement with ShelfGenie for the operation of an Executive Franchise ShelfGenie Business, then, at the time you sign the Franchise Agreement, you will pay to ShelfGenie an initial franchise fee of $69,500 for which you will receive two Territories of approximately 125,000 houses or households each (for a total of approximately 250,000 total houses or households for your Business).

2.  Initial Franchise Fee (Owner/Operator Franchise):  $29,500

• If you are entering into a Franchise Agreement with ShelfGenie for the operation of an Owner/Operator Franchise ShelfGenie Business, then, at the time you sign the Franchise Agreement, you will pay to ShelfGenie an initial franchise fee equal to $29,500.

• As a member of the International Franchise Association (“IFA”), ShelfGenie participates in the IFA’s VetFran Program. If you are a United States or Canadian honorably discharged veteran who meets ShelfGenie’s qualifications for purchasing a franchise, ShelfGenie will discount the initial franchise fee for your first Business by 15%.

3.  Software Enrollment Fee:  $1,000; currently waived

• You must pay to ShelfGenie or its designee an enrollment fee for the setup and initial training for the required business management software (currently WishPortal). The amount of the enrollment fee is currently $1,000, however as of the date of the Disclosure Document, ShelfGenie is waiving this fee.

4.  Demo Kit and Stationery Package:  approximately $300

• In addition, before opening your Business, you must purchase from ShelfGenie or its affiliate demonstration materials for what it calls its “Demo Kit” for approximately $300.

• You may, but you are not required to, purchase certain stationery, forms, labels, and similar materials from ShelfGenie. If you purchase a package of these stationery and related materials from ShelfGenie before opening, it will cost approximately $500.

5.  License Fee:  Executive Franchise – the greater of $400 per month (minimum license fee) or 5% of Gross Sales; Owner/Operator Franchise – the greater of $200 per month (minimum license fee) or 5% of Gross Sales

• Due Date:  Wednesday of each week.

• No minimum License Fee will be imposed until the first calendar day of your fourth full month in operation.

• After the close of each calendar month, ShelfGenie will calculate the total amount equal to 5% of your Gross Sales, and if this amount falls short of the minimum monthly License Fee, the difference will be due on the next License Fee payment date.

• If more than 15% of your Gross Sales in any given year are from outside Territory sales, then, in the next calendar year, you will pay a License Fee on all outside Territory sales equal to 10% of Gross Sales.

6.  MAP Fee:  2% of Gross Sales

• Due Date:  Wednesday of each week.

7.  Digital Marketing Fees:  currently, $750 per month per franchisee, plus $150 per month per Territory (i.e., per each approximately 125,000 household Territory), plus if the Business’s quarterly Gross Sales attributable to digital marketing efforts are above a threshold ShelfGenie from time to time designates, which threshold shall be zero for your first year, a quarterly amount equal to a percentage (as negotiated between ShelfGenie and its designated vendor) of digital sales above the threshold (currently 10% of quarterly Gross Sales derived by the Business from digital marketing activities that are above the designated threshold)

• Due Date:  Paid monthly (currently on the 15th of each month) via ACH.

• These fees count towards the satisfaction of your Minimum Local Marketing Spending requirement.

• For these fees, you will receive certain digital marketing services from ShelfGenie’s designated third-party service providers. ShelfGenie may, from time to time, revise the digital media and the digital marketing services that you receive under this program.

8.  Local Marketing Groups:  not to exceed 3% of Gross Sales

• Due Date:  Determined by Local Marketing Group members.

• ShelfGenie may designate local advertising markets and advertising cooperatives and/or local marketing groups for such markets (collectively, “LMGs”), and if designated, you must participate in and contribute to the LMG’s advertising and marketing programs in your market.

9.  WishPortal Software Monthly Fees:  $250 per month, plus $100 per month for each additional user over 3 users for WishPortal; provided that ShelfGenie is currently waiving these fees for franchisees in good standing

• Due Date:  Paid monthly (currently on the 15th of each month) via ACH, starting the earlier of the month you begin operating your Business, or the month when the first software solution is set up.

• ShelfGenie is currently waiving the WishPortal monthly fees. If ShelfGenie resumes charging these fees, you pay the license fees for the use of WishPortal directly to ShelfGenie.

10.  Technology Package:  $60 per year per email address for email address services; Online Presence and Customer Experience Management Platform: $125 per month

• Due Date:  Paid monthly (currently on the 15th of each month) via ACH, starting the earlier of the month you begin operating your Business, or the month when the first software solution is set up.

11.  Call Center Services Monthly Fees:  currently, $200 per month per franchisee (and not per Franchise Agreement), and $32 per sales appointment booked, the total of which is paid weekly

• Due Date:  The monthly fee is due on the first Wednesday of each calendar month. The weekly fee is due Wednesday of each week.

• You must use ShelfGenie’s designated call center and engage the services of ShelfGenie’s designated call center provider.

• ShelfGenie reserves the right to change these fees or require you to use a different provider, which may be ShelfGenie or an affiliate of ShelfGenie, for these services.

12.  Product Purchases from Affiliates:  based on a price list, which may be changed upon 30 days’ notice, under the Manufacturing Agreement. There are no minimum product purchase requirements.

• Due Date:  As incurred. You must pay 30% of the price as a down payment when the product is ordered and the remainder by ACH draft net 30 day terms once the product is shipped.

• Payable to Manufacturing.

• Payment must include cost of goods, packaging, shipping, handling, and taxes, if applicable. In some cases, you will pay freight companies directly for shipping.

13.  Bookkeeping Services:  currently, $275 per month

• Due Date:  Monthly.

• This fee is imposed by ShelfGenie’s designated third-party bookkeeping service that you are required to engage.

14.  Annual Convention (“Reunion”) Fees:  currently, $1,000 or less

• Due Date:  When you are billed, which may be via automatic bank draft, or within 30 days after Reunion via automatic bank draft.

• ShelfGenie charges you a per-person registration fee to attend the Reunion.

• You must attend Reunion each year. ShelfGenie will charge you this fee regardless of whether you actually attend.

15.  Transfer Fee:  if your Business is sold to a new franchisee: 25% of the then-current initial franchise fee. If you are transferring multiple Territories/Franchised Businesses as part of a single transfer, the transfer fee for each additional transferred Franchised Business/Territory will be 12.5% of the initial franchise fee. If your Business is sold to a current ShelfGenie franchisee that has been approved for an additional location, the transfer fee will be 12.5% of the then-current initial franchise fee for each Territory/Franchised Business sold.

• Due Date:  Before transfer.

• If broker fees or commissions are incurred, these must be paid by you or the transferee.

• This amount is in lieu of the initial franchise fee.

• ShelfGenie may discount or waive the transfer fee if the transfer is to a legal entity you control or to a member of your immediate family.

16.  Late Fees (Franchise Agreement):  $10 per day

• Due Date:  On demand.

• Applies to overdue fees from the due date until all sums are paid.

17.  Dishonored Check or ACH Draft:  $25

• Due Date:  On demand.

• You must pay ShelfGenie for each check returned or ACH draft refused by your financial institution for insufficient funds in your account.

18.  Interest:  12% on unpaid balances

• Due Date:  On demand.

• Payable on all overdue amounts. The 12% charge is calculated as a per annum rate but may be collected on demand, including weekly or monthly through automatic bank draft.

19.  Failure to Maintain Insurance:  ShelfGenie’s actual cost for insurance premiums and a reasonable fee for expenses ShelfGenie incurs

• Due Date:  On demand.

• If you fail to maintain the required insurance coverage on your franchise, ShelfGenie may acquire and pay for the insurance coverage and charge you.

20.  Audit:  cost of audit plus expenses, plus any amount owed as shown by the audit, plus interest and late fees

• Due Date:  When you are billed.

• Payable only if ShelfGenie finds an understatement of Gross Sales of 2% or more or if you fail to provide requested information within 30 days of ShelfGenie’s request.

21.  Renewal Fee:  $1,750 per Territory for Executive Franchise; $1,750 for Owner/Operator Franchise

• Due Date:  On renewal.

22.  Amendment Fee:  $250

• Due Date:  When you are billed.

• You must pay ShelfGenie a processing fee for modifications to your Franchise Agreement that are made at your request.

• When you request an amendment to your Franchise Agreement or related agreements, ShelfGenie may require that you sign a general release releasing it from all claims you may have except claims which, under state law, may not be released.

23.  Unapproved Suppliers:  ShelfGenie’s actual out-of-pocket costs of inspection or testing

• Due Date:  On demand.

24.  Indemnification and Attorneys’ Fees and Costs:  varies according to loss

• Due Date:  On demand.

• If ShelfGenie must engage an attorney to enforce its rights under the Franchise Agreement and it prevails, or if it is sued because of something you do or fail to do, you must indemnify ShelfGenie and/or reimburse it for all costs, including reasonable attorneys’ fees (which may include outside counsel fees and in-house legal costs charged at rates comparable to outside attorneys), interest, court costs, and expenses expended or incurred in enforcing its rights.

25.  Tax Reimbursement:  varies according to tax

• Due Date:  When you are billed.

• You must pay ShelfGenie or to taxing authorities (as applicable) an amount equal to any sales tax, use tax, gross receipts tax, documentary stamp tax, or similar tax (other than income tax), fees, or charges imposed on ShelfGenie due to any required payments you make to it.

• You must pay ShelfGenie such additional amounts as necessary so that it receives all payments from you in full as if no such tax applied.

26.  Initial Training Fee for Additional Attendees:  out-of-pocket expenses

• Due Date:  Payable within 10 days of receipt of invoice, but before attending training.

27.  Additional Training Fee:  the then-current fee; currently, up to $5,000

• Due Date:   When you are billed.

• If you request training in addition to the initial training program, ShelfGenie reserves the right to charge you a training fee, plus you must pay your costs and expenses in connection with such training.

• As of the date of the current Disclosure Document, ShelfGenie may conduct its training programs remotely/virtually due to the COVID-19 pandemic. Therefore, you may not incur travel expenses if your training is done remotely/virtually.

28.  Key Accounts/Management Fee:  up to 5% of total Gross Sales related to Key Account work, including Gross Sales that relate to Key Accounts; Gross Sales that are the result of any lead or any agreement developed by ShelfGenie’s Business Development Department or any similar group that is part of ShelfGenie’s company or is ShelfGenie’s designee; Gross Sales for work that is dispatched from any call center operated by ShelfGenie or its designee; Gross Sales that are audited by ShelfGenie or its designee according to Key Accounts standards or Gross Sales that otherwise benefit from ShelfGenie’s Key Accounts activities or management

• Due Date:  When you are billed or when the fee is deducted from your payment(s) for work performed or added to the invoice.

• If you participate in ShelfGenie’s Key Accounts program, ShelfGenie reserves the right to require you to pay a Key Accounts/Management Fee to it or its designee. ShelfGenie may also sometimes refer to this fee as a “Key Accounts Management Fee” or “Management Fee.”