Detailed Information on Club Z! In-Home Tutoring Services’ Initial Franchise Fee, Royalty Fee + 11 Other Fees (Items 5 and 6, 2021 FDD)
1. Initial Franchise Fee: $19,750 to $34,750
- Your initial franchise fee varies depending on the population of the territory as follows:
- Franchise Fee of $19,750: population up to 50,000
- Franchise Fee of $27,250: population up to 100,000
- Franchise Fee of $34,750: population up to 200,000
- You must pay the initial franchise fee in a lump sum when you sign the Franchise Agreement.
- In consideration for this initial franchise fee, Club Z! grants you a franchise to operate a Club Z! Business in a protected territory, provide you with initial training, and furnish you with the Franchise Package, described in the Franchise Agreement.
- All fees are non-refundable. You pay Club Z! or its affiliates no other fees or payments for services or goods before your business opens.
2. Royalty/Support Fee: the greater of 6% to 8% of Gross Sales, or (a) $450 per month for up to 50,000 population; (b) $550 per month for up to 100,000 population. The greater of 6% of Gross Sales or $600 per month for an expanded territory of up to $200,000 population.
- Due Date: Payable by the 10th day of each month.
3. Advertising Fund: the greater of 2% of Gross Sales or $50 per month
- Due Date: Payable by the 10th day of each month.
- The Advertising Fund Fee will commence 30 days after completion of training.
4. Club Z! Business Package: $250 to $300 per month
- Due Date: Payable on 1st day of each month.
- Beginning 30 days from the date of your Franchise Agreement, $250 must be paid directly to Club Z! for call center services/appointment setting services, cold calling potential business partners on your behalf, live chat services, and a customized website.
- This fee will increase to $300 your third year in business and remain at $300 for the remainder of your Franchise Agreement.
- Payment shall be made monthly by automatic debit to your credit card.
5. Late Fees: $100 initial fee, plus 1.67% or the maximum interest rate permitted by state law if less, of the amount due for each day after the due date that payment is not received
- Due Date: As incurred.
- Payable only when the Royalty/Support Fee and Advertising Fund Fee are not received by the 10th of the month.
6. Software, Virtual Business Telephone Number, Web Hosting, and Email: $75 per month
- Due Date: Payable on 1st day of each month.
- You agree to pay any tax imposed by the state in which your Club Z! Business is located if such tax is imposed on Software Fees or other payments made to Club Z!.
- This fee is payable the first month starting after the execution of the Franchise Agreement.
- Payment shall be made monthly by automatic debit to your credit card.
7. Conference Fee: up to $295 per person
- Due Date: Prior to conference.
- From time to time, throughout the term of your Franchise Agreement, Club Z! will host a national or regional conference and charge you a Conference Fee not to exceed $295 per person, whether or not you attend.
- Club Z! encourages you to attend, but you are not required to do so. The conference will be held at a specific location, as Club Z! designates.
- If you attend, you will have to pay travel, food, and lodging for you and any employees you may bring.
8. Training of Transferee: $3,000
- Due Date: Prior to consummation of transfer.
- Payable when the Franchise is transferred.
- Club Z! reserves the right to increase this fee based on its current rates for similar services.
9. Transfer: $2,000
- Due Date: Prior to consummation of transfer.
- Payable when the Franchise is transferred.
10. Initial Advertising Launch: $2,000 per month for first 3 months
- Due Date: Beginning the 1st day of the month following the date you sign the Franchise Agreement.
- For initial launch advertising and marketing services which Club Z! will execute on your behalf for your territory.
11. Renewal Fee: $250
- Due Date: At time of renewal.
- New Franchise Agreement, which may have different terms or conditions, must be signed by you and Club Z!.
12. Costs and Attorneys’ Fees: will vary under circumstances
- Due Date: As incurred.
- Payable upon your failure to comply with the Franchise Agreement.
13. Indemnification: will vary under circumstances
- Due Date: As incurred.
- You have to reimburse Club Z! if it is held liable for claims arising from your Club Z! Franchised Business’s operations.
I was very interested in Club Z until you pointed out the fees, which are oppressive, IMHO. They might be NO.1 in their segment, but I do not want to pay a penalty for early termination of less than 12 month notice, or $250 for a loaner manual (rental manual?)
I am considering Fresh Coat. What do you think of Fresh Coat. They say that 67 to 75% of my new business would come from the Home office efforts. Is that real? I have painting experience, interior finishing experience, and 47 years law practice as a solo practitioner and 30 years as an apartment complex owner/manager.
Hi Mark,
I really don’t know if there’s any truth to those claims, but to be safe, your business plan should rely on your own efforts to generate leads and customers. If it turns out that the franchisor can really drive that much actual business, that would be a great bonus. I think for a painting franchise, some sort of background in sales or marketing would be helpful, but that’s true for most franchises that don’t have an actual physical location. You can’t rely on any walk-in business, like a food or retail franchise, so you need to be pro-active in getting customers.
If you don’t have a marketing background, make sure that the franchisor provides excellent marketing training and support.
Hope this helps.