How does the initial franchise fee for Crave (Item 5) relate to the restrictions on suppliers (Item 8)?
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.
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, there is no direct financial relationship between the initial franchise fee (Item 5) and the restrictions on suppliers (Item 8). Item 5 outlines the initial fees required to be paid to Crave, including the initial franchise fee for a single Crave Restaurant ($45,000) or Food Truck ($30,000), with potential reductions for multi-unit purchases or for veterans and active-duty military personnel. It also mentions a grand opening marketing fee of $5,000 for a Restaurant and $2,500 for a Food Truck. These fees are generally non-refundable. Item 5 also describes the payment structure for multi-unit development agreements.
Item 8 details the restrictions on where franchisees can source products and services. Crave requires franchisees to purchase or lease fixtures, furnishings, equipment, and other items that conform to Crave's standards and specifications. Franchisees must operate their business in strict conformity with Crave's methods, standards, and specifications, using only approved food and beverage items, ingredients, products, materials, supplies, and paper goods. Crave can modify these standards and specifications and may test samples from the franchisee's inventory to ensure compliance.
While there's no direct financial link where the initial fee impacts supplier choice, compliance with Item 8 is critical. Item 8 states that Crave considers compliance with the requirements described in Item 8 when deciding to grant new, additional, or successor franchises, and breach of these requirements may result in default under the Franchise Agreement. This means that while the initial fee doesn't dictate supplier choices, adhering to the approved supplier list and standards is essential for maintaining a good standing with Crave and securing future franchise opportunities.
In summary, the initial franchise fee and supplier restrictions are distinct aspects of the Crave franchise agreement. The initial fee grants the right to operate a franchise, while the supplier restrictions ensure quality control and brand consistency. Although there is no explicit financial connection, compliance with supplier restrictions can indirectly impact a franchisee's future financial prospects by affecting their eligibility for additional franchises.