How does the Exit initial fee (Item 5) compare to the total estimated initial investment (Item 7)?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
ITEM 5 INITIAL FEES
When you sign the Franchise Agreement, you must pay EXIT Realty Upper Midwest an Initial Fee that ranges from Seven Thousand Five Hundred Dollars ($7,500) to Twenty-Five Thousand Dollars ($25,000), depending on the geographical size and population (including seasonal residents) of the Protected Territory provided to you with the Franchise Agreement. The Initial Fee for a Franchise Agreement is determined according to the following formula:
- (a) Population in excess of 50,000 persons Fee of $25,000 (high density);
- (b) Population between 15,000 and 50,000 persons if the Protected Territory is more than 2 miles from an area with a population of more than 50,000 – Fee of $15,000 (medium density);
- (c) Population of less than 15,000 persons if the Protected Territory is more than 2 miles from an area with a population of more than 5,000 persons – Fee of $7,500 (rural density).
EXIT Realty Upper Midwest retains 75% of the Initial Fee paid for a Franchise Agreement. EXIT is paid the remaining 25% of the Initial Fee.
The Initial Fee for a Franchise Agreement will be uniformly imposed on all Franchisees subject to this Disclosure Document and is not refundable. [Item 7: ESTIMATED INITIAL INVESTMENT]
| Type of Expenditure | Amount | Method of |
|---|---|---|
| Payment | ||
| Initial Franchise Fee1 | $7,500 - $25,000 | Lump Sum |
| Training Expenses | $2,500-$5,000 | As Incurred |
| Real Property – Leased for | $12,000- | As Billed |
| 12 Months2 | $50,000 | |
| Insurance3 | $2,000-$10,000 | As Billed |
| Equipment, Fixtures, Other Fixed Assets, Construction, Remodeling Leasehold Improvements & Decorating Costs4 | $10,000- $30,000 | As Billed |
| Security Deposits, Utility Deposits, Business Licenses & Other Prepaid Expenses5 | $1,500-$5,000 (if applicable) | As Billed |
| Exterior Office Sign | $500-$5,000 | As Billed |
| Automobile Lease6 | $4,800-$9,000 | As Billed |
| Additional Funds (6 months)7 | $20,000- $70,000 | As Needed |
| Total | $60,800- $209,000 |
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the initial franchise fee ranges from $7,500 to $25,000. This fee depends on the geographical size and population density of the protected territory granted to the franchisee. Specifically, a high-density territory (population over 50,000) carries a $25,000 fee, a medium-density territory (population between 15,000 and 50,000, more than 2 miles from a larger area) costs $15,000, and a rural territory (population under 15,000, more than 2 miles from an area with over 5,000 people) has a $7,500 fee. Exit Realty Upper Midwest retains 75% of this initial fee, while Exit receives the remaining 25%.
In comparison, the total estimated initial investment for an Exit franchise ranges from $60,800 to $209,000. This broader investment covers various expenses beyond just the initial franchise fee. These include training expenses ($2,500-$5,000), real property leases for 12 months ($12,000-$50,000), insurance ($2,000-$10,000), equipment, fixtures, and remodeling costs ($10,000-$30,000), security and utility deposits ($1,500-$5,000), exterior office signs ($500-$5,000), automobile leases ($4,800-$9,000), and additional funds for the first six months of operation ($20,000-$70,000).
Therefore, the initial franchise fee represents a portion of the total initial investment, ranging from approximately 3.6% to 41.1% of the total estimated initial investment, depending on the territory and the overall costs incurred. The FDD notes that none of the amounts described in Item 7 are refundable from Exit, but refundability of other amounts will vary depending on the vendor. Prospective franchisees should carefully consider these figures and the factors that can influence them, such as geographic location, management skills, and local economic conditions, as these can significantly impact the actual initial investment required.