Detailed Information on Cruise Planners’ Initial Franchise Fee, Royalty Fee + 20 Other Fees (Items 5 and 6, 2021 FDD)
1. Initial Franchise Fee: varies depending upon Cruise Planners’ assessment of your experience and the amount of commissions you have earned
- You (and all other franchisees who sign the Franchise Agreement presented in the Disclosure Document) will, on signing the Franchise Agreement, pay Cruise Planners a one-time, lump sum, nonrefundable franchise fee. All franchise fees are fully earned by Cruise Planners when you sign the Franchise Agreement.
- The amount of the Initial Franchise Fee varies depending upon Cruise Planners’ assessment of your experience and the amount of commissions you have earned (based on information acceptable to Cruise Planners provided directly by the suppliers and such other information as it deems relevant).
- Cruise Planners determines your experience level in its sole discretion.
- $10,995 for New Travel Advisor (no previous travel advisor experience);
- $6,995 for Some Experience in Travel Industry (“SETI”) (applicant is currently or has recently been working for or with an Approved Travel Entity, and has advanced knowledge and experience in the travel industry that Cruise Planners deems satisfactory and appropriate);
- $3,995 for Retail Experience in Travel Industry (“RET”) (applicant has a current International Air and Travel Agent Network (“IATAN”) card or a Cruise Line International Association (“CLIA”) certification, and has direct recent retail travel sales experience within the previous 18 months that Cruise Planners deems satisfactory and appropriate);
- $695 for Seasoned Travel Advisor (applicant has a current IATAN card or a CLIA certification, and has had at least $100,000 of Departed Commissionable Sales during the previous 12 months or at least $5,000 in earned commissions during the last calendar year, and other qualifications Cruise Planners deems suitable for a Travel Advisor with a high level of current experience).
- Cruise Planners currently participates in the IFA’s VetFran program. Currently, Cruise Planners offers a discount of $3,000 for New Travel Advisors who are qualified U.S. military veterans or first responders such as police officers and firefighters.
- Cruise Planners may finance a portion of the Initial Franchise Fee for New Travel Advisors qualified applicants.
- Qualified applicants generally must pay $6,000 toward the Initial Franchise Fee, pay a $200 nonrefundable application and processing fee and, if approved, sign a promissory note for the balance upon execution of the agreement.
2. E&O Insurance Fee: currently $180 per person per year
- You must purchase errors and omissions (“E&O”) insurance through Cruise Planners at the then-current annual fee (currently $180 per person per year). E&O Insurance covers liability to customers for any mistakes you might make when booking travel for them.
- The Initial Franchise Fee covers the first year’s nonrefundable annual fee for E&O insurance for 1 person in your franchise. On signing the Franchise Agreement, you must purchase E&O insurance for any additional person in your franchise, including any co-owner of the franchise.
3. Annual Access Fee: $85 per person per year
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- You must pay Cruise Planners an annual access fee for each person it requires you to register as a co-owner or associate. This fee is currently $85 per person per year and is nonrefundable.
- During the term of the franchise, Cruise Planners waives the annual access fee for one person in your franchise. On signing the Franchise Agreement, you must pay Cruise Planners the first annual access fee for any additional person, including any co-owner of the franchise.
- The annual access fee offsets some of Cruise Planners’ costs associated with providing access to marketing, training, business development, suppliers, business tools, and other resources; creating and maintaining separate login names and passwords for franchisees and their associates on Cruise Planners’ proprietary web-based CRM software, Cruise Planners’ intranet, and related systems (e.g. learning systems, extranet, etc.); and providing ongoing support to franchisees.
4. Initial Training Program Fee: $695 for each additional person (after the first) who attends the Initial Training Program
- The Initial Franchise Fee covers one person’s attendance at the Initial Training Program. For each additional person who attends the Initial Training Program, you must pay Cruise Planners a training fee of $695.
- If you are a New Travel Advisor, a SETI, or a RET, Cruise Planners provides one hotel room for your use during the Initial Training Program, at no charge to you, except as described below. You must pay for any additional hotel rooms.
- If you do not attend the Initial Training Program within the first 2 training cycles after the effective date of your Franchise Agreement, Cruise Planners may charge you the cost difference for the one hotel room that it provides, if the hotel room rate has increased.
- If you are a Seasoned Travel Advisor, you must pay for all of your hotel rooms during the Initial Training Program.
5. Application and Processing Fee: up to $200
- If you seek financing for a portion of the Initial Franchise Fee, you must pay Cruise Planners a nonrefundable application and processing fee of up to $200 at the time you apply for financing.
6. Royalty: 1.5% to 3% of Gross Commissionable Fares, depending on the commission rates paid by Travel Suppliers; up to 10% of Gross Commissionable Fares if you use unapproved Travel Suppliers
- Due Date: Cruise Planners deducts royalty fees and other amounts due it from the commissions it receives from Travel Suppliers.
- From time to time, Cruise Planners offers sales incentive programs which may lower your royalty fees to as low as 0% if you achieve certain sales volume levels.
7. Annual Maintenance: $0 to $2,000 per year – amount varies depending on your experience level, your Departed Commissionable Revenue, and the number of years you have been a franchisee
- Due Date: On the anniversary of your franchise; the 3rd year annual maintenance fee is due upon renewal.
- Amount varies based on Departed Commissionable Revenue.
8. Annual E&O Insurance Fee: $180 annually per person for you, any co-owner, and each associate
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- Due Date: On the anniversary of your franchise.
- The first year’s E&O insurance fee for 1 person in your franchise is included in the Initial Franchise Fee.
9. Administrative Service Fee: $70 per month
- Due Date: Monthly.
10. Transfers: currently $695 to $7,500
- Due Date: Payable when the transfer takes place.
- Transfer fee varies based on sales volume of franchise and other criteria.
11. Returned Check: $50 per check
- Due Date: When you make good on the returned check which you must do within 7 days of the notice of default.
12. Franchise Changes (relocation, legal entity, business telephone number): currently $195
- Due Date: When Cruise Planners approves your relocation or change in owner’s legal entity and when you change your business telephone number.
- One-time waiver for changes within 90 days of commencement of operations.
13. Administrative Fee to Add an Associate: currently $75 one-time charge for each person you add as an associate
- Due Date: As incurred.
- Only charged if you add additional associate(s).
14. Background Check for an Additional Owner or Associate: $50 one-time charge for each additional owner or associate
- Due Date: As incurred.
- Cruise Planners conducts a background check on you, your owners, and your associates. One background check is done at Cruise Planners’ expense.
- The fee is only charged if you have more than one owner or add additional associate(s).
15. Associate and Supplemental Training Fees: $100 to $695
- Due Date: Prior to training.
16. Training Cancellation: $249 to $695
- Due Date: As incurred.
17. Additional Marketing Services: will vary depending on purchases
- Due Date: As incurred.
- You have the option to purchase Cruise Planners’ Travel Planner magazines, customized marketing pieces and assets, promotional materials, and social media management services.
18. Indemnification: will vary under circumstances
- Due Date: As incurred.
19. Costs and Attorneys’ Fees: will vary under circumstances
- Due Date: As incurred.
20. Annual Access: currently $85 per person per year (fee for 1 person waived)
- Due Date: On the anniversary of your franchise; Cruise Planners will invoice.
- Cruise Planners will pay out of commissions if available; prorated refund if person leaves during the year.
21. Domain Name Change: $75, plus $20 per year, if your domain name is re-directed
- Due Date: As incurred; yearly payments will be made for so long as Cruise Planners re-directs the domain name.
- First domain name is free.
22. AMEX Lockup: $300 per year
- Due Date: As incurred; yearly payments will be made for so long as the logo is used.
In regards to the Royalty fees, you need to understand what they take. As the author states it is 3% on commissions over 6%, most travel companies you will work with pay between 10-15%, so you will fall under the 3% royalty due. 3% royalty sounds great for sure, but it’s not 3% it is more like 20-30% royalty fee, I’ll explain.
Ex. You book a cruise for $1500 and after NCF (non Commissionable fees) are taken out the total commendable revenue is $1000. You make 15% of that $1000 (common commission offered) for a total on $150 commission. Now the royalties kick in, CP takes 3% of the commissionable revenue ($1000) so $30. That $30 is taken from the $150 you earned, meaning CP doesn’t take 3% royalty, they take 20% (30/150).
I’m not saying this is good or bad, it’s just not made clear before your actually see the amount of money royalties take before you start making sales.
Very well explained. People think it’s 3% of commission when is not, and also the Franchiser doesn’t make it really clear. By the time I realized how royalty fees really worked I understood I made a mistake by purchasing a franchise. Not even counting the $150/monthly fee. A host agency is by FAR a lot better than buying a franchise. Just crazy! As soon as my 5 years contract is over I’m moving to a host agency.
This is very bad. Why pay $10,495 for the “Franchise” when you can pay less than $500 per year and get to keep 90% of your commission with a host agency like Global Travel International, Outside Agents, OASIS Travel Network, etc.?
I would think because you have all the support you need, they train you to become a travel agent and, of course, the American Express name along with it.
Do the benefits received through a CP Franchise outweigh the costs and fees associated with it versus the low costs of host agencies?