What upfront and ongoing fees may Auntie Annes collect from franchisees for the POS system?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
ou must execute any software license agreements that we or the licensor of the software require and any related software maintenance agreements. We may require you to maintain certain network connections, which may include using an Internet Service Provider or other communications provider that we approve or designate. Currently, we require you to obtain the POS System from our designated vendor (and we may collect from you the related upfront and ongoing fees for such POS System and pay the vendor on your behalf) and POS System support services from our affiliate.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 54–59)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, franchisees are required to purchase most components of the computer system, including the POS system, from approved suppliers. Auntie Anne's may collect upfront and ongoing fees related to the POS system from franchisees and then pay the vendor on the franchisee's behalf. Franchisees are also required to use designated approved suppliers for point-to-point encryption (P2PE) solutions that work with the POS system to ensure secure payment processing. Additionally, franchisees must execute any software license agreements and maintenance agreements required by Auntie Anne's or the software licensor. Franchisees may also be required to maintain specific network connections through approved internet service providers.
During the fiscal year 2023, Auntie Anne's received $722,663 from franchisees for polling and support fees associated with the POS system. This indicates that these fees are a recurring expense for franchisees. The FDD also mentions that franchisees must accept major credit cards, participate in gift card and loyalty programs, and participate in the in-shop mobile and online ordering program, which may require additional equipment and fees from credit card processing vendors and other hardware and software vendors.
Prospective franchisees should inquire about the specific upfront costs for the POS system, the ongoing polling and support fees, and any additional costs associated with required software licenses, maintenance agreements, and network connections. Understanding these costs is crucial for budgeting and assessing the overall financial viability of the franchise. It is also important to ask about the potential for these fees to change over time and whether there are any options for reducing these expenses.