What markup does Crown Gold Exchange charge if they pay an amount on behalf of the franchisee?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| $1,000 per month | Monthly, by the 5th | See Note 1 and Note 2. | |
| of the following | |||
| month | |||
| Prior to attending | If you send a manager or other employee | ||
| training | to our training program after you open, we | ||
| will charge our then-current training fee. | |||
| We have the right to require franchisees to | |||
| use third-party vendors and suppliers that | |||
| we designate. Examples can include | |||
| computer support vendors, mystery | |||
| shopping, and customer feedback systems. | |||
| The vendors and suppliers may bill | |||
| franchisees directly, or we have the right | |||
| to collect payment for these vendors | |||
| together with a reasonable markup or | |||
| charge for administering the payment | |||
| program. | |||
| We may charge you $500 if your business | |||
| is not in compliance with our system | |||
| specifications or the franchise agreement | |||
| and you fail to correct the non-compliance | |||
| after 30 days’ notice. Thereafter, we may | |||
| charge you $250 per week until you | |||
| correct such non-compliance. | |||
| Amount that we | If we pay any amount that you owe or are | ||
| spend on your | required to pay to a third party, you must | ||
| behalf, plus 10% | reimburse |
Source: Item 6 — OTHER FEES (FDD pages 10–12)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if Crown Gold Exchange pays an amount that a franchisee owes to a third party, the franchisee must reimburse Crown Gold Exchange for that amount. In addition to the amount paid on the franchisee's behalf, Crown Gold Exchange charges a 10% markup on that amount.
This means that if Crown Gold Exchange, for example, pays a $1,000 bill on behalf of a franchisee, the franchisee will owe Crown Gold Exchange $1,100 ($1,000 + 10% of $1,000). This markup compensates Crown Gold Exchange for the administrative costs and efforts involved in making payments on behalf of the franchisee.
It is important for prospective franchisees to understand this policy and factor it into their financial planning. Franchisees should aim to manage their own payments to third parties to avoid incurring this additional 10% charge from Crown Gold Exchange, where possible. This policy is fairly standard in franchising, as it covers the administrative costs for the franchisor.