Besides the royalty fee, what other payments are Ella Cafe franchisees obligated to pay?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- **9.9.
Participation in E-Commerce**.
Franchisee must at all times cooperate with Franchisor and actively participate in any and all social media and other e-commerce advertising programs, management programs, and other platforms Franchisor requires and pay Franchisor or a third-party provider the costs associated with such programs or platforms.
The costs and/or fees associated with these programs are in addition to other advertising fees under this Agreement.
- **9.10.
Business Directory Listings**.
Franchisee must place and pay the cost of business listings in such print and online directories and categories, whether electronic or hard copy, as Franchisor may require from time to time.
Amounts paid for business directory listings will not be credited toward any of the expenditures required by this Section 9.
- 4.3 Other Payments.
In addition to all other payments provided for in this Agreement, Franchisee must pay Franchisor and its Affiliates and all of Franchisee's third-party vendors, suppliers, and landlord promptly when due:
(i) All amounts advanced by Franchisor or which Franchisor has paid, or for which it has become obligated to pay on Franchisee's behalf for any reason whatsoever.
(ii) The amount of all sales taxes, use taxes, personal property taxes, and similar taxes, which are or may be imposed upon Franchisee and required to be collected or paid by Franchisee (a) because of Franchisee's Gross Sales, or (b) because of Initial Franchise Fees, Royalty Fees, or advertising fees (and Franchisee Advertising Co-op dues, if any) collected by Franchisor from Franchisee (but excluding ordinary income taxes).
If Franchisee is unable or unwilling to resolve a customer complaint within fortyeight (48) hours, and it becomes necessary for Franchisor to reimburse a customer in settlement of his or her complaint about work performed at or by your Coffee House, Franchisee agrees to promptly reimburse Franchisor for amounts expended on account of any such complaint.
Franchisee shall participate at its own expense in programs required from time to time by Franchisor for obtaining customer evaluations, reviewing Franchisee's compliance with the System, and/or managing customer complaints, which may include (but are not limited to) a customer feedback system, customer survey programs, and
Franchisee shall purchase or lease all equipment and enter into all business relationships necessary to accept payments as required by Franchisor.
- (i) Franchisor receives a transfer fee of $10,000 ("Transfer Fee") plus any broker fees and other out-of-pocket costs incurred by Franchisor, including attorneys' fees.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, franchisees are responsible for several other payments besides the royalty fee. These include costs associated with e-commerce and social media advertising programs that Ella Cafe requires, which may be paid to Ella Cafe or a third-party provider. Franchisees must also cover the expenses for business directory listings in print and online formats as directed by Ella Cafe.
Ella Cafe franchisees must also pay all amounts that the franchisor advanced or is obligated to pay on the franchisee's behalf. They are responsible for sales, use, personal property, and similar taxes imposed on them due to their gross sales, initial franchise fees, royalty fees, or advertising fees. Ella Cafe may collect these taxes in the same manner as royalty fees and remit them to the appropriate authority, but the franchisee is ultimately responsible for these taxes unless Ella Cafe elects to handle the payments.
Additional expenses for Ella Cafe franchisees include those related to customer complaints, where the franchisee must reimburse Ella Cafe for amounts expended to settle customer complaints if the franchisee fails to resolve the issue within 48 hours. Franchisees also bear the costs of participating in customer evaluation and compliance programs, such as customer feedback systems and mystery shopping, mandated by Ella Cafe. Furthermore, franchisees must cover the costs of equipment and business relationships necessary to accept various payment methods required by Ella Cafe, and they must comply with payment card industry data security standards. If a franchisee seeks to transfer the franchise agreement, they must pay Ella Cafe a transfer fee of $10,000, plus any broker fees and out-of-pocket costs incurred by Ella Cafe, including attorney's fees.