How does the initial franchise fee for Crave (Item 5) relate to the ongoing fees (Item 6)?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
span id="page-10-2">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.
Multi-Unit Development Agreement: If you qualify to develop and operate multiple Crave Franchised Businesses, then you will pay to us a development fee equal to 100% of the initial franchise fee for the first Franchised Business you commit to develop under the Multi-Unit Development Agreement plus 50% of the initial franchise fee for each additional Franchised Business you commit to develop under the Multi-Unit Development Agreement. You may commit to develop any combination of Restaurants, Food Trucks, and Express Restaurants under a Multi-Unit Development Agreement. For example, if you commit to develop three Food Trucks, the development fee is calculated as $30,000 + (2 x $15,000 = $30,000) = $60,000. If you commit to develop three Restaurants, the development fee is calculated as $45,000 + (2 x $20,000 = $40,000) = $85,000. If you commit to develop a minimum of three units in some other combination of Food Trucks and Restaurants, the development fee will be an amount between $60,000 and $85,000. The development fee is fully earned by us when received and is not refundable or credited against any future fees payable by you under any Franchise Agreement or otherwise.
You will sign the Franchise Agreement for the first Franchised Business at the same time you sign the Multi-Unit Development Agreement, and we will apply a portion of the development fee to pay the initial franchise fee for the first Franchised Business in full. For each additional Franchised Business you will develop under the Multi-Unit Development Agreement, we will apply a credit of 50% of the amount of the initial franchise fee for that Franchised Business, and the balance of the initial franchise fee due for that Franchised Business is payable in a lump sum when you sign the Franchise Agreement for that Franchised Business. The development fee is imposed uniformly on all multi-unit developers and is not refundable under any circumstances.
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the initial franchise fee and ongoing fees are distinct payments, although the initial fee can influence the amount of future fees under a multi-unit development agreement. The initial franchise fee grants the franchisee the right to operate a Crave restaurant or food truck. For a single Crave Restaurant, the initial franchise fee is $45,000, while for a Crave Food Truck, it is $30,000. These fees are generally non-refundable. Item 6 outlines various other fees, including royalty fees, brand development fund contributions, and potential liquidated damages if the agreement is terminated for cause.
For franchisees pursuing a multi-unit development agreement, the initial franchise fee structure impacts the development fee. The development fee is 100% of the initial franchise fee for the first unit, plus 50% of the initial franchise fee for each additional unit. For example, committing to three food trucks would result in a development fee of $60,000, while three restaurants would total $85,000. A portion of the development fee is applied to the initial franchise fee for the first franchised business. For each additional business, a credit of 50% of the initial franchise fee is applied, with the balance due upon signing the Franchise Agreement.
Item 6 details the ongoing fees, which are separate from the initial fees. These include royalty fees based on a percentage of gross sales, contributions to a brand development fund, and other potential charges. The royalty fee and brand development fee are typically withdrawn weekly via electronic funds transfer. The initial franchise fee does not offset or directly reduce these ongoing fees, except in the context of the multi-unit development agreement where a portion of the development fee covers the initial franchise fee for subsequent units.
In summary, while the initial franchise fee and ongoing fees are separate obligations, the multi-unit development agreement provides a mechanism where the initial franchise fee influences the overall development fee and subsequent payments. Prospective franchisees should carefully consider the implications of both the initial investment and the ongoing fees when evaluating a Crave franchise opportunity.