What is the Chop5 Salad Kitchen franchisee's obligation if our broker finds the buyer for a transfer?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee 1 | AMOUNT 2, 3 | DUE DATE | REMARKS |
|---|---|---|---|
| System Program | Varies (not currently charged) | 10 days after invoice or as otherwise specified | You must participate in any customer loyalty and/or gift card program we establish and pay all associated program contributions and fees we require to implement and administer these programs. These amounts are paid either to us or to a third party we designate. |
| Fees | |||
| Product Purchases | Varies depending on item purchased | 10 days after invoice | We or our affiliate may serve as a System supplier for certain goods or services you must purchase. If this occurs, we will provide you with a price list upon request. |
| New Product or | Cost of testing (up to $2,500 per test) | 10 days after invoice | This covers the costs of testing new products or inspecting new suppliers you propose. |
| Supplier Testing | |||
| Relocation Fee | $5,000 | At time we approve request to relocate | Imposed if we approve your request to relocate your Restaurant. |
| Renewal Fee | $2,000 | At time you sign Renewal Agreement | Imposed if you renew your franchise rights by signing a successor Franchise Agreement. |
| Transfer Fee | [Franchise Agreement] Greater of $4,000 or 10% of then-current standard\ninitial franchise fee [ADA] $15,000 | Before Transfer | You do not pay us a transfer fee for a Permitted Transfer or Minority Interest Transfer. All other Transfers require payment of the transfer fee. If you sign an ADA, a separate transfer fee is imposed under the ADA and each Franchise Agreement that is assigned. If our broker finds the buyer, you must also reimburse us for all commissions we pay the broker. |
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, if the franchisor's broker finds the buyer for a transfer of the franchise, the franchisee must reimburse Chop5 Salad Kitchen for all commissions they pay the broker. In addition to this reimbursement, the franchisee will also be responsible for paying a transfer fee.
The transfer fee for a Chop5 Salad Kitchen franchise is the greater of $4,000 or 10% of the then-current standard initial franchise fee. However, this transfer fee is not required for a Permitted Transfer or Minority Interest Transfer. If the franchisee has signed an Area Development Agreement (ADA), a separate transfer fee is imposed under the ADA and each Franchise Agreement that is assigned.
This means that a Chop5 Salad Kitchen franchisee looking to transfer their franchise should factor in the cost of broker commissions, on top of the transfer fee, when determining the financial implications of selling their business. It's important to understand the conditions under which a transfer fee may be waived, such as in the case of a Permitted Transfer or Minority Interest Transfer, to minimize costs associated with the transfer.