How do the initial fees for Crave (Item 5) relate to the ongoing obligations of the franchisee (Item 9)?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
disclosed in this Item.
ITEM 5 INITIAL FEES
Franchise Agreement: You must pay us an initial franchise fee of $45,000 for the right to establish a single Crave Restaurant under a Franchise Agreement. If you are purchasing your second or third Restaurant, the initial franchise fee will be reduced to $40,000. If you are purchasing your fourth or later Restaurant, the initial franchise fee will be reduced to $35,000.
You must pay us an initial franchise fee of $30,000 for the right to establish a single Crave Food Truck business under a Franchise Agreement. If you already own and operate a Crave Restaurant and desire to own and operate a Food Truck business, the initial franchise fee for the Food Truck will be reduced to $20,000.
From time to time, we may offer special incentive programs as part of our franchise development activities. We currently offer an incentive program where we will discount the initial franchise fee by $5,000 to veterans and active-duty military personnel for the first Franchised Business purchased. We have the right to offer, modify or withdraw any incentive program without notice to you. The initial franchise fee is imposed uniformly on all franchisees and is not refundable under any circumstances.
Grand Opening Marketing: You must pay us $5,000 if you are opening a Restaurant or $2,500 if you are starting a Food Truck business, for a grand opening marketing campaign that we will conduct on your behalf around the opening of your Franchised Business. This money is not refundable.
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Item 5 details the initial fees a franchisee must pay, while Item 9 outlines the franchisee's ongoing obligations. The initial fees, such as the franchise fee and grand opening marketing expenses, are one-time payments required to start the business. These fees are separate from the ongoing obligations, which include royalty fees, compliance with standards, and advertising contributions. Item 9 references Item 5 to indicate that fees are among the franchisee's obligations.
Specifically, the initial franchise fee for a Crave Restaurant is $45,000, which may be reduced for subsequent restaurant purchases. For a Crave Food Truck, the initial franchise fee is $30,000, also with potential reductions for existing Crave Restaurant owners. Additionally, franchisees must pay $5,000 for a grand opening marketing campaign for a Restaurant or $2,500 for a Food Truck. These initial fees grant the franchisee the right to operate under the Crave brand and receive initial support.
Item 9 provides a table that cross-references various obligations with relevant sections of the Franchise Agreement and corresponding items in the Disclosure Document. Under the 'Fees' obligation, it lists Articles 3, 4, 6, 7, 8, 11, 14, and 18 of the Franchise Agreement and Sections 2 and 3 of the Multi-Unit Development Agreement, linking them to Items 5, 6, 7, and 11 of the Disclosure Document. This indicates that the initial fees outlined in Item 5 are just one aspect of the broader fee obligations that a franchisee will have throughout the term of the franchise agreement, which also include ongoing royalty fees and other payments as detailed in other Items.
In summary, while Item 5 focuses on the upfront costs to begin operating a Crave franchise, Item 9 places these initial fees within the context of all financial and operational obligations a franchisee will face on an ongoing basis. The cross-referencing between these items highlights the continuous financial responsibilities beyond the initial investment.