What is the purpose of the 'Service Support Charge' for a Floyds 99 franchise?

Question

Accepted Answer

[Item 6: OTHER FEES]

| Type of Fee                         | Amount                                                                                                                                                                                                                             | Due Date                                                                                                   | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Royalty1 | 6% of Gross Sales | Payable on the day of the week we periodically designate, based on prior week's Gross Sales | Gross Sales include all revenue from the Barbershop, including sales made away from the Barbershop premises. Gross Sales do not include sales taxes and discounts that have been approved by us in advance. Royalties are paid by electronic transfer of funds. |
| National Marketing Contribution1 | Currently 1.5% of Gross Sales, but we can require (upon 90 days' notice to you) up to a maximum of 3.0% of Gross Sales. The combination of the National Marketing Contribution and Local Advertising Allocation will not exceed a total of 4% of Gross Sales. (See Royalty Remarks above for discussion of "Gross Sales") | Payable on the day of the week we periodically designate, based on prior week's Gross Sales | We currently collect a National Marketing Contribution equal to 1.5% of Gross Sales and reserve the right to increase this amount up to 3.0% of Gross Sales on 90 days' prior written notice to you. Contributions are used primarily for production of advertising and marketing for the Barbershops. See Item 11. Our affiliate-owned Barbershops contribute the same as franchisee-owned Barbershops. The National Marketing Contribution is paid by electronic transfer of funds separate from the royalty transfer. Certain franchisees that signed Franchise Agreements prior to the date of this Disclosure Document have a National Marketing Contribution requirement of 1% of Gross Sales. |
| Local Advertising Allocation2 | 1% to 2% of Gross Sales The combination of the National Marketing Contribution and Local Advertising Allocation will not exceed a total of 4% of Gross Sales. | As incurred | The Local Advertising Allocation is in addition to the National Marketing Contribution, but is retained by you to advertise your Barbershop. This is the minimum average you must spend each calendar quarter, with a report of expenditures submitted as part of your required financial reporting to us. Funds spent on local advertising must be focused on the promotion of your Shop to consumers. Funds spent through sites or networks such as Indeed, Craigslist, or other similar sites or professional networks, whether to recruit employees or for other purposes, are not approved as local advertising. If we establish a Regional Advertising Co-op which includes your Barbershop, your Local Advertising |
| Type of Fee                       | Amount                                                                                                                                                                                          | Due Date                                                                                             | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  |  | Allocation may be reallocated to the co-op. |
| Regional Advertising Co-ops2 | Not currently assessed. May vary, with recurring contributions up to 2% of Gross Sales. | Usually on a weekly basis, based on prior week's Gross Sales, or as directed by co-op | As of the date of this Disclosure Document, there were no established cooperatives. If a cooperative is established in your area, the contribution of each member is anticipated to be up to 2% of Gross Sales. Our Barbershops will contribute on the same basis as franchised Barbershops. If we form a cooperative, you will be bound by the decisions of the majority of the members of the cooperative regarding expenditures, assessments and dues, to the extent we approve them. The Local Advertising Allocations of co-op members will reduce proportionally. |
| Marketing Agency Services5 | As charged by third party vendors. In some cases we pay the marketing agency on your behalf and you reimburse us for the actual cost of the marketing agency's services | As incurred | You may elect to use the services of our marketing agency to prepare materials or marketing collateral or provide other services for your Barbershop. You are responsible for payment of the actual costs for such materials and services and may be required to reimburse us for such actual costs if we pay the marketing agency on your behalf. |
| Interest and Late Charges1 | $25 late charge, plus the lesser of 1.5% per month, or highest rate of interest allowed by law | Late fee automatically assessed; interest on demand | Begins to accrue the day after payments are due. |
| Costs of Inspection and Audit1 | Varies, with interest on any past due amounts at lesser of 1.5 % per month or highest rate of interest allowed by law | 15 days after receipt of our notice to you of any underpayment | Payable only if we decide to conduct an audit and: (1) you understated your Gross Sales by more than 3%; (2) the audit resulted from your failure to submit reports to us or our inability to collect royalties due for either two consecutive weeks or four total weeks during any calendar year; or (3) you do not cooperate in our request for an inspection and audit. |
| Transfer Fee1 | $7,500, plus $5,000 for every undeveloped franchise under a Development Agreement | Before effectiveness of transfer | Payable when the franchise agreement, interest in the Barbershop or the franchise is transferred by you. The transferee is charged no initial franchise fee. Additional Development Fees may be charged to the buyer if a new Development Agreement is executed. |
| Type of Fee                                                                                                                                        | Amount                                                                                                              | Due Date                                  | Remarks                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|-------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Relocation Fee1                                                                                                                                    | $5,000                                                                                                             | Before you relocate your Barbershop | You may not relocate the Franchised Business to any location without our prior written consent for a location that meets our then-current site selection criteria for the premises of a FLOYD'S 99 Shop and pay the Relocation Fee.                                                                                                                                       |
| Renewal Fee1 20% of the then current initial then current franchise fee for a Franchise single (first) Agreement franchise |                                                                                                                     | When you sign the                         | Payable if you opt for and qualify for a successor franchise at the end of the initial term. We currently waive the payment of an initial franchise fee for those franchisees who renew. We reserve the right to change this policy at any time. See Item 1 of this Disclosure Document for a more detailed discussion of the renewal of existing franchises. |
| Extensions of Development Schedule (Development Agreement) 1                                                                              | $5,000 extension fee for the second extension                                                                | As incurred                               | If you fail to open or maintain the required number of Shops under the Development Schedule, we may (in our sole discretion) grant you the right to extend the Development Schedule. If provided, the first extension is at no charge and the second extension requires payment of a nonrefundable $5,000 extension fee.                                        |
| Trainer Expenses1                                                                                                                                  | Currently $200-$400 per day, depending on the trainer's expertise, plus travel expenses.              | As incurred                               | Payable if we send a trainer to your Barbershop at your request.                                                                                                                                                                                                                                                                                                                      |
| Additional Site Plan Fees1                                                                                                                      | $100 an hour                                                                                                       | As incurred                               | Payable only if we are required to make excessive changes to your local architect's plans for your Barbershop.                                                                                                                                                                                                                                                                     |
| Additional Assistance Fee1                                                                                                                      | Currently $250 a day, plus travel and living expenses; daily rate will be then current published price | As incurred                               | Payable only if you request additional on-site assistance or if we require you to receive on-site assistance.                                                                                                                                                                                                                                                                      |
| Inventory Purchases5                                                                                                                               | Current published prices                                                                                         | As incurred, on net 15-day terms       | Our designated supplier will charge you for the inventory you purchase. You must maintain a reasonable level of inventory of Floyd's branded hair care products plus a mix of other branded products that meets our specifications.                                                                                                                                    |
| Alternate Suppliers – Testing and Inspection Costs1                                                                                          | You must reimburse us for our actual cost of any testing and the reasonable cost of investigation to    | As incurred                               | You must notify us and obtain our written approval in advance if you want to purchase or lease items from a supplier we have not designated or approved. You are responsible for our                                                                                                                                                                                         |

Source: Item 6 — OTHER FEES (FDD pages 14–20)

What is the purpose of the 'Service Support Charge' for a Floyds 99 franchise?

Answer from 2025 FDD Document

What This Means (2025 FDD)

Type of Fee	Amount	Due Date	Remarks
Royalty1	6% of Gross Sales	Payable on the day of the week we periodically designate, based on prior week's Gross Sales	Gross Sales include all revenue from the Barbershop, including sales made away from the Barbershop premises. Gross Sales do not include sales taxes and discounts that have been approved by us in advance. Royalties are paid by electronic transfer of funds.
National Marketing Contribution1	Currently 1.5% of Gross Sales, but we can require (upon 90 days' notice to you) up to a maximum of 3.0% of Gross Sales. The combination of the National Marketing Contribution and Local Advertising Allocation will not exceed a total of 4% of Gross Sales. (See Royalty Remarks above for discussion of "Gross Sales")	Payable on the day of the week we periodically designate, based on prior week's Gross Sales	We currently collect a National Marketing Contribution equal to 1.5% of Gross Sales and reserve the right to increase this amount up to 3.0% of Gross Sales on 90 days' prior written notice to you. Contributions are used primarily for production of advertising and marketing for the Barbershops. See Item 11. Our affiliate-owned Barbershops contribute the same as franchisee-owned Barbershops. The National Marketing Contribution is paid by electronic transfer of funds separate from the royalty transfer. Certain franchisees that signed Franchise Agreements prior to the date of this Disclosure Document have a National Marketing Contribution requirement of 1% of Gross Sales.
Local Advertising Allocation2	1% to 2% of Gross Sales The combination of the National Marketing Contribution and Local Advertising Allocation will not exceed a total of 4% of Gross Sales.	As incurred	The Local Advertising Allocation is in addition to the National Marketing Contribution, but is retained by you to advertise your Barbershop. This is the minimum average you must spend each calendar quarter, with a report of expenditures submitted as part of your required financial reporting to us. Funds spent on local advertising must be focused on the promotion of your Shop to consumers. Funds spent through sites or networks such as Indeed, Craigslist, or other similar sites or professional networks, whether to recruit employees or for other purposes, are not approved as local advertising. If we establish a Regional Advertising Co-op which includes your Barbershop, your Local Advertising
Type of Fee	Amount	Due Date	Remarks
-----------------------------------	-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	------------------------------------------------------------------------------------------------------	----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
			Allocation may be reallocated to the co-op.
Regional Advertising Co-ops2	Not currently assessed. May vary, with recurring contributions up to 2% of Gross Sales.	Usually on a weekly basis, based on prior week's Gross Sales, or as directed by co-op	As of the date of this Disclosure Document, there were no established cooperatives. If a cooperative is established in your area, the contribution of each member is anticipated to be up to 2% of Gross Sales. Our Barbershops will contribute on the same basis as franchised Barbershops. If we form a cooperative, you will be bound by the decisions of the majority of the members of the cooperative regarding expenditures, assessments and dues, to the extent we approve them. The Local Advertising Allocations of co-op members will reduce proportionally.
Marketing Agency Services5	As charged by third party vendors. In some cases we pay the marketing agency on your behalf and you reimburse us for the actual cost of the marketing agency's services	As incurred	You may elect to use the services of our marketing agency to prepare materials or marketing collateral or provide other services for your Barbershop. You are responsible for payment of the actual costs for such materials and services and may be required to reimburse us for such actual costs if we pay the marketing agency on your behalf.
Interest and Late Charges1	$25 late charge, plus the lesser of 1.5% per month, or highest rate of interest allowed by law	Late fee automatically assessed; interest on demand	Begins to accrue the day after payments are due.
Costs of Inspection and Audit1	Varies, with interest on any past due amounts at lesser of 1.5 % per month or highest rate of interest allowed by law	15 days after receipt of our notice to you of any underpayment	Payable only if we decide to conduct an audit and: (1) you understated your Gross Sales by more than 3%; (2) the audit resulted from your failure to submit reports to us or our inability to collect royalties due for either two consecutive weeks or four total weeks during any calendar year; or (3) you do not cooperate in our request for an inspection and audit.
Transfer Fee1	$7,500, plus $5,000 for every undeveloped franchise under a Development Agreement	Before effectiveness of transfer	Payable when the franchise agreement, interest in the Barbershop or the franchise is transferred by you. The transferee is charged no initial franchise fee. Additional Development Fees may be charged to the buyer if a new Development Agreement is executed.
Type of Fee	Amount	Due Date	Remarks
----------------------------------------------------------------------------------------------------------------------------------------------------	---------------------------------------------------------------------------------------------------------------------	-------------------------------------------	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Relocation Fee1	$5,000	Before you relocate your Barbershop	You may not relocate the Franchised Business to any location without our prior written consent for a location that meets our then-current site selection criteria for the premises of a FLOYD'S 99 Shop and pay the Relocation Fee.
Renewal Fee1 20% of the then current initial then current franchise fee for a Franchise single (first) Agreement franchise		When you sign the	Payable if you opt for and qualify for a successor franchise at the end of the initial term. We currently waive the payment of an initial franchise fee for those franchisees who renew. We reserve the right to change this policy at any time. See Item 1 of this Disclosure Document for a more detailed discussion of the renewal of existing franchises.
Extensions of Development Schedule (Development Agreement) 1	$5,000 extension fee for the second extension	As incurred	If you fail to open or maintain the required number of Shops under the Development Schedule, we may (in our sole discretion) grant you the right to extend the Development Schedule. If provided, the first extension is at no charge and the second extension requires payment of a nonrefundable $5,000 extension fee.
Trainer Expenses1	Currently $200-$400 per day, depending on the trainer's expertise, plus travel expenses.	As incurred	Payable if we send a trainer to your Barbershop at your request.
Additional Site Plan Fees1	$100 an hour	As incurred	Payable only if we are required to make excessive changes to your local architect's plans for your Barbershop.
Additional Assistance Fee1	Currently $250 a day, plus travel and living expenses; daily rate will be then current published price	As incurred	Payable only if you request additional on-site assistance or if we require you to receive on-site assistance.
Inventory Purchases5	Current published prices	As incurred, on net 15-day terms	Our designated supplier will charge you for the inventory you purchase. You must maintain a reasonable level of inventory of Floyd's branded hair care products plus a mix of other branded products that meets our specifications.
Alternate Suppliers – Testing and Inspection Costs1	You must reimburse us for our actual cost of any testing and the reasonable cost of investigation to	As incurred	You must notify us and obtain our written approval in advance if you want to purchase or lease items from a supplier we have not designated or approved. You are responsible for our