What is the relationship between the Exit initial fee (Item 5), training expenses (Item 7) and other fees (Item 6)?
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 6: OTHER FEES]
| in one or more transfers— transfer fee equal to 10% of the then-current Initial Fee (not to exceed 25% of the Initial Franchise Fee paid). | |||
|---|---|---|---|
| Minor Transfer. Transfer of less than a 50% interest of the Franchise, or less than 50% interest in the equity or voting rights in the entity that owns or controls the Franchise—$500. See Note6 | |||
| Late Fee | 5% of the late payment. | If a payment is more than 30 days late. | Payable by you to EXIT and EXIT Realty Upper Midwest |
| Interest | Past due amounts are subject to interest at the prime interest rate plus 5%, or the highest contract annual percentage rate allowed by applicable law, whichever is less. | Commencing 30 days after payment is late. | Payable by you to EXIT Realty Upper Midwest |
| Audit Fee7 | See Note8 | See Note8 | See Note8 |
[Item 7: ESTIMATED INITIAL INVESTMENT]
| 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 |
[Item 7: ESTIMATED INITIAL INVESTMENT]
Note 7 This estimate includes legal expenses, staff salaries, utilities and operating expenses for the first 6 months of operation. The estimate includes travel, lodging and incidental expenses for initial training. Tuition is not charged for attendance of approved attendees at initial training. 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. These figures are estimates and will vary by your geographic area; how much you follow our methods and procedures; your management skill, experience and business acumen; the relative effectiveness of your staff; local economic conditions; competition; and the revenue level reached during the initial period. We cannot guarantee that you will not have additional expenses starting the business. This estimate was calculated based upon the average operating expenses of EXIT Franchisees throughout the United States.
[Item 11: FRANCHISOR'S AND SUBFRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING]
EXIT charges you $500, if you sign up and fail to attend the training or if you cancel on less than 30 days' notice. If you cancel in less than 10 days EXIT charges you $1,000. At the option of EXIT, some or all of the training may be online.
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the initial fee, training expenses, and other fees represent distinct financial obligations for franchisees. The initial fee, ranging from $7,500 to $25,000, is a one-time payment due upon signing the Franchise Agreement. This fee is determined by the geographical size and population density of the franchisee's protected territory. Exit Realty Upper Midwest retains 75% of the initial fee, while Exit receives the remaining 25%. This fee is non-refundable.
Training expenses, estimated between $2,500 and $5,000, cover the costs of travel, lodging, and meals incurred during the initial training program. These expenses are paid directly to airlines, hotels, and restaurants as they are incurred. While Exit does not charge tuition for the initial training, a franchisee may be charged $500 if they sign up for training but fail to attend or cancel with less than 30 days' notice; cancellation within 10 days incurs a $1,000 fee. The initial training program is conducted a minimum of twice annually and runs for five days.
Other fees encompass a variety of potential costs, such as transfer fees, late fees (5% of the late payment), and interest on overdue amounts (prime interest rate plus 5%). Transfer fees can range from $500 for minor transfers to 10% of the then-current initial fee for other transfers. Franchisees are also responsible for an audit fee if an audit reveals underpayment of amounts owing under the Franchise Agreement, especially if the underpayment is willful or exceeds 5%. These fees are payable to Exit and Exit Realty Upper Midwest and are subject to change by Exit.