What is the relationship between the Exit initial fee (Item 5) and the training expenses (Item 7)?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Expenditure | Amount | Method of | When Due | To Whom |
|---|---|---|---|---|
| Payment | Paid | |||
| Initial Franchise Fee1 | $7,500 - $25,000 | Lump Sum | When you sign the Franchise Agreement | EXIT Realty Upper Midwest1 |
| Training Expenses | $2,500-$5,000 | As Incurred | During Training | Airlines, Hotels and Restaurants |
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.
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.
EXIT charges you $500.00, if you sign up and fail to attend the training or cancel on less than 30 days' notice. The estimate does not include an owner's salary or draw.
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the initial franchise fee and training expenses are two distinct costs a new franchisee must consider. The initial franchise fee, detailed in Item 5, ranges from $7,500 to $25,000, depending on the population density of the protected territory granted to the franchisee. Exit Realty Upper Midwest retains 75% of this fee, while Exit receives the remaining 25%. This fee is non-refundable and must be paid when signing the Franchise Agreement.
Item 7 outlines the estimated initial investment, which includes a separate allocation for training expenses, estimated between $2,500 and $5,000. These training expenses cover travel, lodging, and meals incurred during the initial training. While tuition is not charged for approved attendees, franchisees are responsible for these out-of-pocket costs. Additionally, Exit charges a fee of $500 if a franchisee signs up for training but fails to attend or cancels with less than 30 days' notice; this cancellation fee increases to $1,000 if the cancellation occurs within 10 days or less of the training.
In summary, the initial franchise fee is a one-time, non-refundable payment for the franchise rights, while the training expenses cover the franchisee's costs to attend the mandatory initial training program. Both fees are part of the initial investment required to start an Exit franchise, but they are allocated for different purposes and paid to different entities (in the case of training expenses).