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What are all the fees a Casiola franchisee must pay, as detailed in Items 5 and 6?

Casiola Franchise · 2024 FDD

Answer from 2024 FDD Document

[Item 6: OTHER FEES]

Explanatory Notes to Item 6

Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. At our election we may directly collect the Gross Sales of your Casiola Business and we will pre-deduct all of the fees and payments due to us, our affiliates, or our designated suppliers, and we will remit the balance to you. If applicable and, at our election, we require payment from you subject to our specification and instruction, including, our election to have fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Casiola Business into the designated bank accounts that are subject to our ACH authorization. As directed by us, you must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

Note 2: Royalty Fees – You must pay to us a continuing royalty fee (the "Royalty Fee"). The continuing Royalty Fee is payable and due instantly on a per transaction basis or as otherwise directed by us and is equal to 4.9% (the "Royalty Rate") of all Gross Rental Revenues+ (defined below). The Royalty Rate is 8% of all Gross Rental Revenues+ for Out of Territory Customers. In most, if not all instances, as directed by us, the Gross Rental Revenues+ of your Casiola Business will be received directly by us or our affiliate. We are authorized to pre-deduct and pay to ourselves all Royalty Fees and other fees due from you to us from the Gross Rental Revenues+ of your Casiola Business. If any federal, state or local tax other than an income tax is imposed on the Royalty Fee which we cannot directly and, dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective royalty fees received by us is not less than 4.9% of your Gross Rental Revenues+.

"Ancillary Third Party Service Fees" means fees paid to a Casiola Business as reimbursement for services, parts, and supplies provided to a customer of the Casiola Business by a third party provider of ancillary services such as cleaning, plumbing, and handyman services as authorized and designated by us.

Your Royalty Fee obligations are subject to a minimum requirement equal to and calculated based on the following monthly minimum royalty fee requirements (the "Monthly Minimum Royalty Fee Requirement"):

Note 4: Franchisee Directed Local Marketing – On an on-going monthly basis, you must spend not less than $450 per month for your first Territory plus an additional $450 per month for each Additional Territory on the local marketing of your Casiola Business within your Operating Market and in accordance with our standards and specifications. We may require that this fee be paid directly to us and that we allocate and spend these funds on behalf of your Casiola Business.

Note 5: Local and Regional Advertising Cooperatives – If two or more Casiola Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Casiola Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Casiola Business franchisee will have one vote for each Casiola Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate will count toward satisfaction of your minimum local marketing requirements and shall not exceed the local marketing requirement.

Note 6: Technology Fee – The continuing monthly technology fee is an administrative fee and is not associated with any particular service but is used, at our discretion, to defray some of our costs related to system website and intranet (the "Technology Fee").

Note 7: Customer Services and Refunds – This fee will be based on the costs incurred by us, including refunds and/or credits that we may undertake on behalf of a customer that was not satisfied with the services or products provided by the Franchised Business. You must guarantee your services to your customers. If we determine that your customer is entitled to reimbursement of fees paid to you or an obligation that you assumed, we may reimburse your customer directly. You must reimburse us for the amounts that we reimburse your customer. You must also participate in any warranty insurance programs that we designate.

As designated by Franchisor in this Agreement, the Manual or otherwise, Franchisee shall pay the following additional fees to either Franchisor, Franchisor's affiliate(s), or Franchisee's designee(s):

  • (1) Brand Development Fund Fee Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees, the Brand Development Fund Fee as set forth in Article 9 of this Agreement.

  • (2) Customer Satisfaction Non-Compliance Fee Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees, a Customer Satisfaction Non-Compliance Fee upon demand of Franchisor following the occurrence of a Customer Satisfaction Non-Compliance Event.

  • (3) Non-Compliance Fees Franchisee shall pay to Franchisor all Non-Compliance Fees in accordance with the terms of this Agreement including, but not limited to, Payment Non-Compliance Fees, Operations Non-Compliance Fees, and Reporting Non-Compliance Fees.

  • (4) Supplemental Training Fees Franchisee shall pay to Franchisor all training fees in accordance with the terms of this Agreement including, but not limited to, Additional Initial Training Fees and Supplemental Training Fees.

  • (5) Quality Assurance Fees Franchisee shall pay to Franchisor, Franchisor's affiliates, or Franchisor's designees on-going weekly, monthly, and/or per use fees related to quality assurance fees assessed by Franchisor related to periodic inspections of Franchisee's Casiola Business, quality inspections related to short-term rental properties and rental customer experiences, and secret shopper type evaluations.

Quality assurance fees shall be assessed and determined by Franchisor, in Franchisor's Reasonable Business Judgment.

  • (6) Annual Conference Attendance Fees Franchisee shall be responsible for all expenses of its personnel attending the Annual System Conference including travel, meals and lodging.

Franchisee shall be required to pay to Franchisor an Annual Conference Attendance Fee.

"Customer Satisfaction Non-Compliance Event" means any circumstance and/or event whereby Franchisee's monthly customer satisfaction and/or approval ratings, as measured on a monthly basis by a reputation management and/or customer satisfaction platform designated or selected by Franchisor, fails to achieve an aggregate customer satisfaction and/or approval rating of not less than 4.0 stars out of 5 stars or below a net promoter score of 50, you must pay to us a non-compliance fee of between $250 to $750 per month for each month of non-compliance. If a condition of non-compliance occurs for more than three months, then we may increase this non-compliance fee to a monthly fee of not more than $750 per month.

"Customer Satisfaction Non-Compliance Fee" means a fee payable by Franchisee in an amount equal to not less than $250 per month. If a Customer Satisfaction Non-Compliance Event(s) occurs or lasts for more than three consecutive months then Franchisor, in Franchisor's Reasonable Business Judgment, may increase the Customer Satisfaction Non-Compliance Fee to a monthly amount determined by Franchisor but not in excess of $750 per month.

What This Means (2024 FDD)

According to Casiola's 2024 Franchise Disclosure Document, franchisees are subject to a variety of fees, as detailed in Item 6. These fees include an ongoing royalty fee of 4.9% of Gross Rental Revenues, or 8% for Out of Territory Customers. Franchisees must also adhere to a Monthly Minimum Royalty Fee Requirement, and may be charged a Supplemental Royalty Fee if their total quarterly royalty payments fall short of this minimum. Franchisees are obligated to spend a minimum of $450 per month on local marketing for their first territory, with an additional $450 per month for each additional territory.

Additional fees include a technology fee, which is an administrative fee used to defray costs related to the system website and intranet. Franchisees may also incur customer service and refund fees based on costs incurred by Casiola for customer refunds or credits due to dissatisfaction with the franchisee's services. Participation in local or regional advertising cooperatives may be required, with contributions counting toward the minimum local marketing requirements. Franchisees may also be subject to a Customer Satisfaction Non-Compliance Fee ranging from $250 to $750 per month if their customer satisfaction ratings fall below a specified threshold.

Item 6 also mentions that Casiola may directly collect the Gross Sales of the franchisee's business and pre-deduct all fees and payments due. Franchisees are required to sign an ACH Authorization Form permitting Casiola to electronically debit their bank account for fee payments and must use designated payment systems at their expense. Other fees that franchisees may incur include Brand Development Fund Fees, Non-Compliance Fees (such as Payment, Operations, and Reporting Non-Compliance Fees), Supplemental Training Fees, and Quality Assurance Fees related to inspections and evaluations of the Casiola business. Franchisees are also responsible for Annual Conference Attendance Fees, covering travel, meals, lodging, and the attendance fee itself.

Prospective Casiola franchisees should carefully consider these fees and their potential impact on profitability. Understanding the conditions under which these fees are charged and how they are calculated is crucial for financial planning and operational decision-making. Franchisees should also be aware of Casiola's right to modify or add fees, as outlined in the franchise agreement.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.