Spherion Staffing’s Initial Franchise Fee, Royalty Fee + 23 Other Fees

Detailed Information on Spherion Staffing’s Initial Franchise Fee, Royalty Fee + 23 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $35,000

• You must pay Spherion Staffing an initial franchise fee when you sign the Franchise Agreement. The initial franchise fee varies as described in the following paragraphs.

• A purchaser of an undeveloped market will pay Spherion Staffing a franchise fee of $35,000. However, Spherion Staffing offers the following discounts to eligible franchisees:

• If you are of a minority ethnic group under the US Small Business Administration rules, Spherion Staffing offers a 25% discount on the franchise fee.

• As a member of the International Franchise Association, Spherion Staffing participates in the IFA’s VetFran program, offering a 25% discount on its initial franchise fee to veterans of the US armed forces who otherwise meet the requirements of the VetFran program.

• If you have a minimum of 5 years’ experience working within the staffing industry, Spherion Staffing also offers a 25% discount on its franchise fee.

• If you, as the principal owner of a franchise with Spherion Staffing, enter into another Franchise Agreement for a different undeveloped market location, also as the principal owner, Spherion Staffing will reduce the initial franchise fee by 25% for the second Franchise Agreement and by 35% for each additional Franchise Agreement thereafter.

• If you enter into the Territory Development Agreement with Spherion Staffing, your initial franchise fee will be calculated in accordance with this discount schedule. So, for example, if you enter into a Territory Development Agreement for 3 franchised store locations, your initial fee would be $84,000.

• You must pay the initial fee in full when signing the Territory Development Agreement, but thereafter you will not be required to pay an initial franchise fee when you sign the remaining Franchise Agreements that are required for the opening of the additional franchise office locations.

• The owner of an existing business that provides services similar to those the Franchise Agreement authorizes and that wishes to convert to Spherion Staffing’s franchise will pay a franchise fee of $5,000 when Spherion Staffing signs the Franchise Agreement.

• Only one of the eligible discounts described above will apply per Franchise Agreement.

2.  Transfer Fee:  varies

• There is a transfer fee if you purchase an existing franchisee’s business.

• If you, as an existing Spherion franchisee, purchase the exiting business of another Spherion franchisee, the transfer fee is $7,500.

• If you are not an existing Spherion franchisee at the time of purchase, the transfer fee is 10% of the total sales price, provided, however, that the transfer fee will be a minimum of $10,000 and a maximum of 35% of the then-current initial franchise fee for a Spherion franchise.

• If Spherion Staffing approves the purchase, it will keep the deposit as a nonrefundable transfer fee, in lieu of the initial franchise fee described above. If Spherion Staffing does not approve the purchase, or if it timely exercises its right of first refusal, it will immediately return the deposit.

3.  Purchase of the Computer System Hardware

• You are also required to purchase the required hardware and software components of the Computer System through Spherion Staffing. The fee charged for the purchase of the Computer System is not refundable.

4.  Pre-Opening Advertising:  $2,000 to $5,000 for General Staffing franchisees and $7,000 to $11,000 for Professionals franchisees

• A number of franchisees elect to engage in a mix of pre-opening promotional efforts including, but not limited to, public relations, community sponsorship, and traditional and digital advertising. If this is your choice, you are free to utilize and customize a range of Spherion templates and work with pre-approved vendors or another agency of your choice.

• Pre-opening promotional costs can range from $2,000 to $5,000 for General Staffing franchisees and $7,000 to $11,000 for Professionals franchisees. The actual cost will depend on the specific promotional efforts you purchase.

5.  Temporary Sales Fee:  Spherion Staffing pays you your commission on (and it retains the balance of) the Temporary Gross Profits for the Accounting Period. Spherion Staffing pays its Spherion General Staffing franchisees 75% and retains 25% of the Temporary Gross Profits. Spherion Staffing pays its Spherion Professionals franchisees 70% and retains 30% of the Temporary Gross Profits.

• Due Date:  Within 30 days after the end of each Accounting Period.

6.  Full-Time Placement Fee:  Spherion Staffing pays its Spherion General Staffing franchisees an 88% commission on (and it retains the 12% balance of) the Full-Time Placement Sales in each Fiscal Year. For its Spherion Professionals franchisees, Spherion Staffing offers a different commission structure on Full-Time Placement Sales because permanent placement makes up a larger portion of professional level staffing business. For Spherion Professionals franchisees who have been permitted to offer finance and accounting services, Spherion Staffing pays an 80% commission on (and it retains the 20% balance of) the Full-Time Placement Sales in each Fiscal Year. For all other Spherion Professionals franchisees, Spherion Staffing pays an 85% commission on (and it retain the 15% balance of) the Full-Time Placement Sales in each Fiscal Year.

• Due Date:  Within 30 days after the end of each Accounting Period.

7.  Computer System Support Fee:  for General Staffing franchisees: $200 per site (subject to change on 30 days’ notice); for Professionals franchisees: $300 per site (subject to change on 30 days’ notice)

• Due Date:  Spherion Staffing deducts this monthly from your commission.

• This fee for your “front office” system covers software upgrades and user support services from Spherion Staffing’s corporate office.

8.  Management Information Services and Technology Enhancement Fee (MISTEF):  for General Staffing franchisees: 1.5% of total gross payroll and full-time placement sales; for Professionals franchisees: 1.75% of total gross payroll and full-time placement sales

• Due Date:  Spherion Staffing deducts this monthly from your commission.

• This fee for your “back office” system covers the payroll and billing services Spherion Staffing performs.

9.  SHL Talent Central License Fee:  not currently passed on, but at this time the license fee is $484 per site plus any applicable sales tax; and is subject to vendor increases

• Due Date:  If Spherion Staffing changes its policy, it will deduct this from your commission annually.

• Spherion Staffing currently pays this license fee for the computer software it provides to you for applicant testing. Spherion Staffing may change this policy in the future, and charge it back to you.

10.  Gross Profit Quota Fee:  will vary under circumstances

• Due Date:  Within 30 days after billing.

• Payable in each Fiscal Year in which you fail to attain the Gross Profit Quota contained in Schedule 2 of the Franchise Agreement.

11.  Spherion Marketing Fund:  for General Staffing franchisees: 0.25% of Sales; for Professionals franchisees: 0.25% to 0.75% of Sales

• Due Date:  Spherion Staffing deducts this from your commission or it may bill you monthly.

• Spherion Staffing matches your contributions by spending an equal amount on name awareness.

12.  Reimbursement for Direct Mailings:  Spherion Staffing’s costs for production and postage

• Due Date:  Spherion Staffing bills you as it incurs this expense and deducts the amount you owe from your commission.

• You must reimburse Spherion Staffing for its production and postage expenses if it sends direct mailings to current or prospective customers, full-time placement applicants, and Temporary Employees, or in support of other local initiatives on your behalf.

13.  Accounts Receivable Funding Fee on Accounts Receivable Over 60 Days Old:  the rate is calculated by multiplying the variable annual rate (which is the Prime Rate of interest quoted on the first business day of each Accounting Period in the Southeastern Edition of the Wall Street Journal plus one-and-a-half percentage points) by 30/365, with the result multiplied by the amount over 60 days ([Prime Rate + 1.5%] x 30/365 x AR over 60 days)

• Due Date:  Spherion Staffing deducts this from your monthly commission.

14.  Uncollectible Customer Billings:  will vary under circumstances

• Due Date:  Spherion Staffing deducts this from your monthly commission.

15.  Area Expansion:  for General Staffing franchisees: fee will be determined based on the market tier size of your franchised area; for Professionals franchisees: fee will be negotiated by the parties based upon the temporary help payroll and potential revenue in the expansion area

• Due Date:  Upon signing an amendment to the Franchise Agreement.

• You must pay this fee if Spherion Staffing allows you to expand your area.

16.  Temporary Employee Wages:  will vary under circumstances

• Due Date:   Spherion Staffing deducts this from your monthly commission.

• Spherion Staffing deducts from your commission any Temporary Employees’ wages it paid which it determines were based on forged, fraudulent, erroneous, or improper time slips.

17.  Purchases from Spherion Staffing or Its Affiliates:  will vary under circumstances

• Due Date:  Spherion Staffing deducts this from your monthly commission.

• Spherion Staffing deducts from your commission all amounts you owe it or its affiliates for materials and services.

18.  Release from Non-Competition Covenants

• Applicable to Spherion General Staffing franchisees only.

19.  Indemnification:  will vary under circumstances

• Due Date:  Upon demand.

• You must reimburse Spherion Staffing for any losses and expenses resulting from certain of your acts or omissions.

20.  Materials or Courses for Additional (Post Initial) Training:  will vary depending on what is provided

• Due Date:  Spherion Staffing deducts from your commission after you attend training.

• To cover the cost of courses or materials Spherion Staffing may purchase from a third-party vendor.

21.  Spherion Centralized Delivery Cooperative (SCDC):  will vary depending on level of service assistance provided by the SCDC

• Due Date:  Spherion Staffing deducts this from your commission during the applicable enrollment period.

22.  National Recruiting Center (NRC) Assistance Fee:  25% to 75% of Gross Profit for Temporary Employees Recruited by NRC

• Due Date: Spherion Staffing deducts this from your monthly commission.

• Percentage depends on assistance requested by Spherion Staffing.

23.  Monster License Fee:  $73 per month per office location or Department ID

• Due Date:  Spherion Staffing deducts this from your monthly commission.

24.  Revenue Sharing Fee:  up to 50% of Sales for a Temporary Employee or Full-Time Placement Sale

• Due Date:  Reflected on your monthly commission.

25.  Territorial Liquidated Damages:  will vary under circumstances

• Due Date:  Upon demand.

• Only applicable to Spherion Professionals franchisees.