Detailed Information on Maaco’s Initial Franchise Fee, Royalty Fee + 18 Other Fees (Items 5 and 6, 2022 FDD)
1. Initial Franchise Fee: $20,000 to $45,000
- You must pay Maaco a $45,000 initial franchise fee in a lump sum when you sign the Franchise Agreement. The initial franchise fee is not refundable in whole or in part under any circumstances.
- If you sign a new Development Agreement or if you are an existing franchisee in good standing who desires to purchase an additional Maaco Center for new development, the initial franchise fee will be reduced as follows:
- (a) $22,500 for your second Maaco Center (developed under the Development Agreement, if applicable), and
- (b) $20,000 for your third and each subsequent Maaco Center (developed under the Development Agreement, if applicable).
- In connection with single-unit development, if you are an existing franchisee in good standing of one of Maaco’s Driven Brands Holdings affiliates, and you commit to developing and opening a new Maaco Center, the initial franchise fee will be reduced as follows:
- (a) $22,500 if the Center is your second Driven Brands Holdings franchised outlet, and
- (b) $20,000 if the Center is your third or subsequent Driven Brands Holdings franchised outlet.
- The initial franchise fee discounts described above may not be combined.
2. Development Fee: 100% of the initial franchise fee for each Maaco Center required to be developed under the Development Agreement
- If you sign a Development Agreement, you must pay Maaco a non-refundable “Development Fee,” which will be equal to 100% of the initial franchise fee for each Maaco Center required to be developed under the Development Agreement.
- For each Maaco Center developed under the Development Agreement, Maaco will credit the applicable portion of the Development Fee against the applicable initial franchise fee on the date on which the initial franchise fee is payable under the applicable Franchise Agreement. The Development Fee is not otherwise credited against any fees payable to Maaco.
3. Initial Training and Opening Fee: $7,000
- You must pay Maaco a non-refundable “Initial Training and Opening Fee” of $7,000 no later than 30 days before your (or your majority investor’s) and the Center’s principal operator’s (if the principal operator is not you or your majority investor) arrival at the initial training program (or 30 days before you are scheduled to open the Center if you are an existing franchisee that is not attending the initial training program).
- Maaco uses the Initial Training and Opening Fee to cover expenses it incurs in providing opening assistance and the initial training program.
- Additional people may attend the initial training program if you pay Maaco’s then-current training fees for any additional attendees (currently, $2,500 per attendee).
- You are responsible for your and your attendees’ travel, lodging, meal, and other expenses during initial training.
4. Initial Advertising Contribution: $20,000
- You must pay Maaco a non-refundable “Initial Advertising Contribution” of $20,000 no later than 30 days before the Center is scheduled to open. Maaco will use, within one year after the actual opening of the Center, the Initial Advertising Contribution for your grand opening marketing of the Center, which may include traditional marketing, digital marketing, promotional and event materials, and digital, promotional and traditional assets. The Initial Advertising Contribution is paid to Maaco to purchase these marketing materials.
- Maaco will determine, in its sole discretion, the types of marketing and marketing materials to be used for the grand opening marketing of the Center.
- The actual costs of these programs may exceed your Initial Advertising Contribution, in which case Maaco will charge you the difference.
- Maaco does not charge you an Initial Advertising Contribution when you renew your franchise.
5. Pre-Opening Purchases: $86,500 to $220,000
- You may elect to purchase an equipment package, opening inventory, stationery, signage packages, and computer hardware from Maaco’s affiliates. Based on current costs, Maaco estimates your purchase of these pre-opening items from its affiliates will be between approximately $86,500 to $220,000.
6. Royalty Fee: 9% of gross receipts (except that if you develop the Center as a new Maaco Center, you will pay 4% of gross receipts of the Center for the first 6 months the Center is open to the public as a Maaco Center)
- Due Date: Payable weekly on Friday of each week on royalties due for the preceding calendar week by electronic withdrawal.
- If you sign a new Development Agreement on or after the issuance date of the current disclosure document, for each Franchise Agreement signed thereunder, if you are then in compliance with the Development Schedule, you also will sign a Development Incentive Addendum. Under the Development Incentive Addendum, you will pay a reduced weekly royalty fee for the applicable Maaco Center for a limited period of time, subject to certain conditions.
7. Weekly Marketing Fee: $1,000, or an amount equal to the weekly marketing budget of franchisees operating in your designated market area as of the date of the Franchise Agreement, whichever is greater
- Due Date: Payable weekly at the same time weekly royalty payments are due.
- The weekly marketing fee is in addition to the Initial Advertising Contribution.
8. Management System Software License Fee: Multi-Shop Operator (bundled Management System and estimating software): $349 per month, plus taxes; Single-Shop Operator (bundled Management System and estimating software): $389 per month, plus taxes; Management System software only: $259 per month, plus taxes
- Due Date: Payable monthly on first of each month.
9. Commingled Funds Fee: $2,500, plus $250 for each month thereafter until the funds are separately accounted for, as determined by Maaco in its sole discretion
- Due Date: Payable upon receipt of audit report.
- Payable if audit reveals commingling of Center funds with any other funds, whether your personal funds or funds from your other businesses.
10. Audit Expenses: cost of audit, including the charges of any independent accountant and/or third-party vendor, attorneys’ fees, and per diem fees and costs of Maaco’s employees’ related travel and lodging and other out-of-pocket costs, plus interest
- Due Date: Upon receipt of audit report.
- Payable if audit reveals that any payments due to Maaco have been understated or an audit is made necessary by your failure to maintain and/or provide reports, supporting records, or other information, including point of sale records, as required under the Franchise Agreement.
11. Sales Commission: 10% of the gross sales price of the Center or $30,000, whichever is greater
- Due Date: On or before closing date.
- Paid to Maaco if it obtains for you a purchaser for your Center or if you sell your Center to an individual under an agreement with Maaco.
12. Transfer Fee: $3,000
- Due Date: Prior to effective date of transfer.
13. Renewal Fee: $2,500
- Due Date: On or before renewal date.
- Payment to be included with renewal documents.
14. Interest on Late Payments: the maximum rate permitted by law or, in the absence of such rate, a rate equal to 1.5% per month
- Due Date: As incurred.
- Any payment or other amount you owe Maaco or its affiliates or subsidiaries will bear interest, compounded monthly, after the due date.
15. Insurance Reimbursement: policy cost, plus reasonable fee for Maaco’s expenses
- Due Date: As incurred.
- If you do not obtain the required insurance coverage, Maaco may secure coverage for you and charge you for its costs and expenses.
16. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You must indemnify and hold Maaco, its parents, affiliates, and subsidiaries, together with all of their respective former, present, and future officers, directors, shareholders, employees, agents, attorneys, servants, representatives, heirs, successors, assigns, and predecessors, in their individual and corporate capacities, harmless against any and all claims arising from the development and operation of the Center(s).
17. Costs of Enforcement: will vary under circumstances
- Due Date: As incurred.
- Includes any judgment, reasonable attorneys’ fees, court costs, and expenses of litigation.
18. Sublease Payments: will vary under circumstances
- Due Date: Monthly.
- Although Maaco or its affiliates generally do not sublease the Center premises to you, if it or they do so, the rent under the sublease may exceed the rent it (or its affiliate) pays to the prime landlord. The mark-up will generally not exceed 10% of the rent and other charges due under the prime lease.
19. Technology Fee: currently, $0
- Due Date: Weekly.
- Maaco reserves the right to charge you a weekly technology fee.
20. Supplemental or Refresher Training Fee: Maaco’s then-current fee. Currently, Maaco charges up to $400 per person, per day for supplemental or refresher training provided at Maaco’s headquarters; and up to $500 per person, per day for onsite supplemental or refresher training.
- Due Date: As incurred.
- Payable if Maaco requires you (or your majority investor) and the Center’s principal operator (if applicable) to attend and complete supplemental or refresher training programs, workshops, and/or educational seminars.
- You are responsible for all expenses incurred in connection with these programs, including travel expenses, room and board, and wages for your attendees, and in connection with onsite training, travel expenses, and room and board for Maaco’s training instructors.
- Maaco will provide and pay only for training instructors’ wages and materials.