Besides the $10,000, what other costs are associated with the Chocolate Fish Coffee fee for selling my business?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our actual cost | On demand | Payable only if (1) we audit you because | |
| you have failed to submit required reports | |||
| or other non-compliance, or (2) the audit | |||
| concludes that you under-reported gross | |||
| sales b | |||
| period | |||
| Payable only if we conduct an inspection | |||
| of your business because of a | |||
| governmental report, customer complaint | |||
| or other customer feedback, or your | |||
| default or non-compliance with any | |||
| system specification. | |||
| We may cure your non-compliance on | |||
| your behalf (for example, if you do not | |||
| have required insurance, we may purchase | |||
| insurance for you), and you will owe our | |||
| costs plus a 10% administrative fee. | |||
| $10,000 plus any | Payable if you sell your business. | ||
| broker fees and other | |||
| out-of-pocket costs | |||
| we incur | |||
| An amount equal to | |||
| royalty fees and | |||
| Brand Fund | |||
| contributions for the | |||
| lesser of (i) 2 years | |||
| or (ii) the remaining | |||
| weeks of the | |||
| franchise term. |
Source: Item 6 — OTHER FEES (FDD pages 10–13)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, if a franchisee sells their business, they will have to pay Chocolate Fish Coffee $10,000, plus any broker fees and other out-of-pocket costs that Chocolate Fish Coffee incurs. This means that in addition to the flat $10,000 fee, franchisees are responsible for covering any expenses Chocolate Fish Coffee incurs during the sale, such as legal or administrative costs. These additional costs are not defined with a specific amount, so they could vary significantly depending on the complexity of the sale and the involvement of Chocolate Fish Coffee.
Additionally, the franchisee may have to pay an amount equal to royalty fees and Brand Fund contributions for the lesser of two years or the remaining weeks of the franchise term. This could be a substantial amount, depending on the franchisee's gross sales and the remaining term of the franchise agreement. The royalty fee is 6% of gross sales, and the brand fund contribution is 1% of gross sales.
It is important for a prospective Chocolate Fish Coffee franchisee to understand these potential costs associated with selling their franchise, as they could significantly impact the profitability of the sale. Franchisees should carefully review the franchise agreement and consult with Chocolate Fish Coffee to get a better understanding of the potential out-of-pocket costs and how the royalty and brand fund contributions are calculated in the event of a sale.