What costs are included in the Management Fee charged by Azal Coffee?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Minimum Local Advertising and Advertising Cooperative | 1% of monthly Gross Sales | As incurred | You must spend this amount each month on advertising in your local market. (3) |
| Mobile Application / Technology Fee | Currently $50 per month, but we reserve the right to charge up to $300 per month. | On the 1st business day of each month | This fee may increase over the term of your franchise agreement and will be used by us for expenses relating to the development and maintenance of technology used in our franchise system. |
| Inventory and Equipment | Varies | On receipt of billing | You are required to purchase your initial and ongoing supply of certain inventory and equipment items from us or our affiliates. |
| Point-of-Sale System Fee | Not currently assessed | On receipt of billing | We do not currently, but reserve the right to, require you pay us each month for licensing and management fees associated with your point-of-sale system that we will distribute to the appropriate third-party vendors. |
| Maintenance, Repairs, Renovation, and Modernization | Not more than $75,000 every 5 years | As incurred | Maintenance, repair, renovation, and modernization fees are payable to us only if you do not perform required maintenance, repairs, renovation, and modernization.(4) |
| Mystery Shopper Fee | Actual cost to us | 5th day of each month | We will use these fees to administer a program to evaluate and report on the operations of our franchisees and to otherwise support the uniformity and quality of operations of Stores. |
| Type of Fee(1) | Amount | Due Date | Remarks | |---------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Insurance | Actual cost to us | On receipt of billing | If you fail to purchase insurance for your Franchise Business, we may do so at your expense. | | Gift Card and other Programs | Not currently assessed | Periodically by EFT that we initiate | If we establish a program, we may periodically reconcile payments and we may charge an administrative fee. See Note 5. | | Additional Training | Currently $250 per trainer per day plus travel, room and board expenses. | Before additional training | We may charge training fees if you request to have additional people attend the initial training program or if you request or we require additional training.(6) | | Rescheduling & Cancellation Fees | Our actual expenses | On receipt of billing | If you are not ready to open, and we have to reschedule opening training, you will pay the expense of rescheduling, which may include cancellation fees, travel and living expenses incurred by us and our employees and agents, and the wages due to them. | | Late Charge, NSF Fees and Interest | $100 late charge, NSF fees of at least $30 for each item returned, and 1.5% per month interest or maximum rate allowed by law. | On receipt of billing | A late charge must be paid on all late payments; you must reimburse us for NSF fees we incur; and interest must be paid on all overdue amounts. |
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Review Fee | $10,000 | At the time of delivery of an offer notice | If you desire to accept an offer from a 3rd party to purchase your franchise, you must deliver an offer notice to us along with the review fee. |
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2024 FDD)
Based on Azal Coffee's 2024 Franchise Disclosure Document, there is no mention of a "Management Fee" in the provided excerpts. However, there are several other fees that Azal Coffee franchisees may be required to pay. These include fees related to technology, advertising, inspections, and other specific circumstances.
Specifically, the FDD mentions a "Mobile Application / Technology Fee" that is currently $50 per month, but could increase to $300 per month. This fee is earmarked for the development and maintenance of technology used in the Azal Coffee franchise system. There is also a "Minimum Local Advertising and Advertising Cooperative" fee, which is 1% of monthly Gross Sales, to be spent on local advertising.
Other fees that an Azal Coffee franchisee might encounter include audit and inspection expenses (if an audit is triggered by failure to furnish reports or an understatement of gross sales), product and supplier approval fees (up to $3,000), data security consultant and cyber insurance costs, indemnification, liquidated damages for failure to comply with obligations ($100 to $2,500), deadline extension fees ($5,000), liquidated damages for loss of bargain under the Franchise Agreement, inventory and equipment costs, point-of-sale system fees, maintenance/repairs/renovation/modernization fees (up to $75,000 every 5 years), and mystery shopper fees.
Since the term "Management Fee" is not defined, a prospective Azal Coffee franchisee should clarify with the franchisor whether any of the listed fees are considered part of a broader management fee, or if there are any other fees associated with the ongoing management and support provided by Azal Coffee.