How much is the transfer fee for a Cinch I.T. development agreement, and when is it payable?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE1 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| to client | must pay us for our time and any compensation (i.e., replacement product) given to clients. | ||
| Audits | Cost of audit plus interest on underpayment | As incurred | Payable only if audit shows understatement is willful or if 2% or more of gross sales for a two month period. |
| Interest | Interest on overdue payment | As incurred | Interest rate will be 1.5% per month or if the maximum interest rate permitted by state law is less, then interest will be charged at the lesser allowed rate. Interest begins from the date payment was due. |
| Late Fee | $100 per occurrence plus interest | On demand, but only if you are delinquent in your payments to us or otherwise violate an obligation under the Franchise Agreement | Payable the day after payment or other event (Ex: a required report) is due, in addition to the interest. |
| Transfer, Assignment | $10,000 | Time of transfer | Payable if you sell your franchise. No fee charged if you transfer franchise to a corporation or other entity you control. |
| Transfer Fee – Development Agreement | $5,000 for each unopened Franchise; $10,000 for each open and operating Franchised Business. | Time of transfer | Payable if Multi-Unit Developer sells its franchise. No fee charged if you transfer franchise to a corporation or other entity you control. |
| Multi-Unit Extension Fee – Development Agreement | $5,000 per extension | As incurred | Payable if Multi-Unit Developer desires to extend a Development Period. |
| Renewal | $5,000 | Time of renewal | New franchise agreement, which may |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, a transfer fee is required if a Multi-Unit Developer sells their franchise. The amount of the transfer fee depends on the status of the franchises being transferred. For each unopened franchise, the transfer fee is $5,000. However, for each franchise that is open and operating, the transfer fee is $10,000.
This fee is due at the time of the transfer. It is important to note that this transfer fee is only applicable when a Multi-Unit Developer sells their franchise to a third party. If the transfer is to a corporation or other entity that the Multi-Unit Developer controls, no transfer fee is charged.
For a prospective Cinch I.T. franchisee, this means that if they hold a development agreement and later decide to sell it, they will need to pay Cinch I.T. a transfer fee. The fee can vary significantly depending on how many locations have been opened and are operating at the time of the transfer. This should be factored into any decision to sell the development agreement.