16 Substantial Fees Every Plato’s Closet Franchisee Needs to Know About

Detailed Information on Plato’s Closet’s Initial Franchise Fee, Royalty Fee + 14 Other Fees (Items 5 and 6, 2026 FDD)

• You must pay to Plato’s Closet “Initial Fees” to cover the cost of goods and services that it provides to you before your Store opens. The Initial Fees include the Initial Franchise Fee and the initial cost of Plato’s Closet’s point-of-sale system and proprietary software.

• Each component of the Initial Fees is described below:

1.  Initial Franchise Fee:  $15,000 to $25,000

• If you are opening a single Store, you must pay an “Initial Franchise Fee” of $25,000 to Plato’s Closet. The Initial Franchise Fee is $15,000 if you are currently opening a second or subsequent Store or if you are an existing franchisee of one of the franchisor’s other franchised concepts.

• You must sign a separate Franchise Agreement for each Store. You must pay the Initial Franchise Fee for your first Store in a lump sum to Plato’s Closet when you sign the Franchise Agreement. The Initial Franchise Fee is nonrefundable.

2.  Point-of-Sale (POS) System:  $23,200 to $30,900

• You must use in your Store the point-of-sale system (the “POS System”) which Plato’s Closet has selected for your Business System, and you must enter into a Software License Agreement with Plato’s Closet for use of its proprietary software program (the “Proprietary Software”).

• The initial cost of the POS System and Proprietary Software payable to Plato’s Closet will range from $23,200 to $30,900 for each Store. This amount is not refundable.

• You will generally purchase the POS System and Proprietary Software four weeks prior to the open to buy period.

3.  Continuing Fee:  5% of your “Gross Sales”

• Due Date:  On or before Wednesday of each week for the previous week.

• “Gross Sales” means the total revenues you receive from the sale of goods and services, whether by cash or by check, credit card or trade, in connection with the Store, less customer refunds and returns. Gross Sales includes any sales permitted though the Internet.

• Gross Sales do not include wholesale transactions from Plato’s Closet franchisees to other Plato’s Closet franchisees in good standing with the franchisor. Gross Sales will not include sales tax collected from customers and actually paid to appropriate tax authorities.

• In certain situations, other franchisees may be paying a lower percentage rate for continuing fees than you are. All new franchisees are required to pay the percentage rate stated in the disclosure document. However, a franchisee with an earlier Franchise Agreement may have been required to pay a lower percentage rate than the stated amount or may be required to pay less upon renewal of their Franchise Agreement.

• In the future, Plato’s Closet may change the continuing fees for new and renewing franchisees unless your Franchise Agreement specifically grants you the right to renew your Franchise Agreement at a lower rate.

• Plato’s Closet requires you to allow it to withdraw continuing and other fees directly from your bank account.

4.  Marketing Fee:  $1,500 per year

• Due Date:  January 1 of each year.

• Your initial payment will be prorated based on the effective date of your Franchise Agreement and invoiced immediately.

• Plato’s Closet may, with a minimum of 60 days’ prior written notice, increase the yearly Marketing Fee. Said fee will not increase more than $1,000 during the term of the Franchise Agreement.

5.  Cooperative Advertising:  minimum required amount when combined with Advertising Fee and local marketing expenses is 6% of your Gross Sales

• Due Date:  Established by the franchisor or franchisees.

• The franchisor or local Plato’s Closet franchisees may establish an advertising cooperative in your area. The local advertising cooperative will establish the amount of cooperative advertising fees; however, your required contribution will not be less than .5% of Gross Sales, regardless of any vote or by-law of the cooperative..

• If a company-owned store is a member of your cooperative, it will have voting power equal to that of franchised stores. Company-owned stores will not have controlling voting power in any local cooperative.

• There are currently no company-owned Plato’s Closet stores.

6.  Local Marketing Expenses:  minimum required amount, when combined with Advertising Fee and cooperative advertising expenses, is 6% of your Gross Sales

• Due Date:  Minimum amount must be spent during each calendar year.

• To the extent your annual contributions to Advertising Fees and cooperative advertising programs are less than 6% of the Gross Sales for your Store, you must conduct additional advertising and marketing activities in your local geographic area. Your local advertising activities, however, will not eliminate your obligations to contribute to cooperative advertising programs.

• If you do not spend at least 6% of Gross Sales for a calendar year on Advertising Fees, approved cooperative advertising or local advertising, as applicable, Plato’s Closet may require that you pay it the difference between what you should have spent for advertising during the calendar year and what you actually spent.

• In such case, Plato’s Closet will spend such amount as follows: deposit into the Ad Fund any Advertising Fees that should have been paid by you for the year, and spend any remaining amount on any type of advertising or marketing that Plato’s Closet deems appropriate for your business, although Plato’s Closet will use reasonable efforts to spend such remaining amount in your local geographic area.

7.  Advertising Fee to North American Ad Fund:  beginning July 1, 2026 with the implementation of the Ad Fund, 2% of your Gross Sales, but may be increased to 3% of your Gross Sales

• Due Date:  On or before Wednesday of each week for the previous week.

• As further described in Item 11, Plato’s Closet is implementing an Ad Fund. As a result, beginning July 1, 2026, you must pay Plato’s Closet an Advertising Fee of 2% of Gross Sales of your Store.

• Thereafter, Plato’s Closet may, with a minimum of 60 days’ prior written notice, adjust the frequency and/or amount of the Advertising Fee to 3% of Gross Sales of your Store, and/or modify the frequency and minimum amounts you must spend on approved regional cooperative advertising and local marketing, provided the total of the Advertising Fee along with the minimum required amount you must spend on approved regional cooperative advertising and local marketing does not exceed 6% of Gross Sales for your Store.

• You may, at your discretion, spend more than 6% of your Store’s Gross Sales on advertising and marketing activities.

8.  Transfer Fee:  $10,000

• Due Date:  Before completion of transfer.

• This fee is payable when the Franchise Agreement or a substantial portion of the assets of the Store or any controlling interest in the franchisee is transferred.

9.  Audit Expenses:  cost and expenses related to audit

• Due Date:  After inspection or audit.

• Payable only if understatement is greater than 2%.

10.  Renewal Fee:  $10,000

• Due Date:  30 days before renewal of Franchise Agreement.

11.  Software Fee:  $295 per month (plus applicable taxes)

• Due Date:  First calendar day of each month.

• This fee covers services, including its maintenance and repair services, as well as for any updates, modifications, and enhancements to the Software which Plato’s Closet elects to release.

12.  Technology Fee:  currently, $0

• Due Date:  Periodically, if established.

13.  Remodeling Expenses:  will vary under circumstances

• Due Date:  When incurred.

• You must modernize your Store upon notice from Plato’s Closet, although it cannot require you to do so more than once every 5 years. The modernization must conform to the standards that Plato’s Closet requires at that time for similarly situated new Plato’s Closet Stores.

• The scope of modernization may range from simply repainting the Store to completely refurbishing the entire Store, including replacement of fixtures, exterior signage, sign supplies, equipment, and POS System.

• Plato’s Closet cannot estimate the current costs for a modernization project because the scope and extent of the modernization will vary based on the then-current brand standards, the condition of the Store, and the cost of labor and materials at that time.

• You may make these payments in whole or in part to Plato’s Closet’s approved third parties and/or preferred vendors. Before you modernize your Store, you must submit your modernization plans to Plato’s Closet for its approval.

14.  Insurance:  will vary under certain circumstances

• Due Date:  When Plato’s Closet requests reimbursement.

• Payable to Plato’s Closet if you fail to pay insurance premium and Plato’s Closet pays it for you.

15.  Interest Expenses:  lesser of 18% per year or maximum rate permitted by law

• Due Date:  When due.

• Payable if Continuing Fee or other amounts due Plato’s Closet are not timely paid.

16.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  When incurred.

• Plato’s Closet may recover costs and reasonable attorneys’ fees if you lose in a dispute with it.

The Best of Franchise Chatter

🥇The Most Profitable Franchises of 2026

🥈Franchises Ranked by Average Revenues

🥉Franchises Ranked by Average Profits

🏆Franchise Winners, Survivors & Losers

Subscribe Now or Log In

Franchise Chatter is reader-supported. We may receive a commission for leads generated from affiliate links and banners on our site.