Under what circumstances will Chocolate Fish Coffee charge its 'actual costs'?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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| 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. | | | | | Our costs and losses | | You must indemnify and defend (with | | | from any legal | | counsel reasonably acceptable to us) us | | | action related to the | | and our affiliates against all losses in any | | | operation of your | | action by or against us related to, or | | | franchise | | alleged to arise out of, the operation of | | | | | your franchise (unless caused by our | | | | | misconduct or negligence). | All fees are payable only to us (other than local marketing spend and software subscription charges). All fees are imposed by us and collected by us (other than local marketing spend and software subscription charges). All fees are non-refundable.
Source: Item 6 — OTHER FEES (FDD pages 10–13)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the company may charge franchisees their 'actual costs' under several specific circumstances. These costs are in addition to other fees outlined in the FDD.
First, Chocolate Fish Coffee will charge its actual costs if they incur expenses, including reasonable attorney fees, while attempting to collect amounts owed by the franchisee. Additionally, if a franchisee requests in-person support, Chocolate Fish Coffee may charge their actual costs plus any out-of-pocket expenses, such as travel, lodging, and meals for the employees providing the support. Furthermore, if Chocolate Fish Coffee deems it necessary to resolve a customer complaint about a franchisee's business, the franchisee may be required to reimburse Chocolate Fish Coffee for their expenses.
Second, Chocolate Fish Coffee may charge its actual cost if an audit is conducted due to the franchisee's failure to submit required reports or other non-compliance issues, or if the audit reveals that the franchisee under-reported gross sales. Chocolate Fish Coffee may also charge its actual cost if they conduct an inspection of the franchisee's business due to a governmental report, customer complaint, or the franchisee's default or non-compliance with any system specification.
Finally, if a Chocolate Fish Coffee franchisee sells their business, they may incur broker fees and other out-of-pocket costs. Also, franchisees are responsible for indemnifying Chocolate Fish Coffee against losses from legal actions related to the operation of their franchise, unless the action is caused by Chocolate Fish Coffee's misconduct or negligence.