Under what conditions would an Auntie Annes franchisee be required to pay a reinstatement fee?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee1, 3 | Amount | Date Due | Remarks |
|---|---|---|---|
| Reinstatement Fee | 10% of the amount of the then-current Initial Franchise Fee, plus Royalty Fees that would have been payable in period between termination and reinstatement | Before reinstatement | If we terminate your Franchise Agreement due to a health and safety default, you cure the default and want to be reinstated, and we agree to reinstate your Franchise Agreement, you must pay us a reinstatement fee. |
Source: Item 6 — OTHER FEES (FDD pages 30–44)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, a franchisee may be required to pay a reinstatement fee under specific circumstances related to termination of the Franchise Agreement. If Auntie Annes terminates the Franchise Agreement due to a health and safety default, and the franchisee subsequently cures that default and seeks reinstatement, Auntie Annes may agree to reinstate the Franchise Agreement.
In the event that Auntie Annes agrees to reinstate the agreement, the franchisee must pay a reinstatement fee. This fee is calculated as 10% of the then-current Initial Franchise Fee, in addition to the Royalty Fees that would have been payable during the period between the termination and reinstatement of the agreement.
This condition highlights the importance of maintaining health and safety standards within the Auntie Annes franchise. Failure to do so can lead to termination and significant costs for reinstatement, should Auntie Annes agree to it. The reinstatement fee covers not only a portion of the initial franchise fee but also the ongoing royalty fees, potentially creating a substantial financial burden for the franchisee seeking to resume operations.