How is the Back Office Services Fee determined and paid to Management Recruiters by the franchisee?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
to and maintenance of Franchisor's billing and payroll system;
- invoicing customers for Recruiter Services and Contract Staffing Services;
- accounts receivable and cash receipts application services;
- basic accounting assistance including preparation of monthly profit and loss statements and balance sheets for the Franchise Business;
- collections assistance including calls and demand letters, provided, however, that Franchisee shall bear ultimate responsibility for collections;
- accounts payable assistance including payment of regular monthly, quarterly, and annual vendor invoices (which amounts Franchisee will advance to Franchisor) on behalf of Franchisee; and
- optional liaison services between Franchisee and any professional employment organization or similar organization Franchisee selects to assist with benefits and payroll administration of internal staff.
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- Fees and Expenses. For the Services to be performed hereunder, Franchisee shall pay to Franchisor the fixed Back Office Services Fee as defined in Franchisor the Franchise Agreement (the "Fee") to be subtracted directly from Franchisee's Share and reflected on Franchisee's Settlement Statement.
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- Term. This Agreement shall commence as of the Effective Date of the Franchise Agreement and shall continue thereafter during the Term of the Franchise Agreement (the "Term"). This Agreement shall terminate immediately upon termination of the Franchise Agreement.
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- Independent Contractor.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, franchisees are required to pay a Back Office Services Fee during the term of the agreement. In exchange for this fee, Management Recruiters provides services such as updates to and maintenance of their billing and payroll system, invoicing for recruiter and contract staffing services, accounts receivable and cash receipts application services, basic accounting assistance (including profit and loss statements and balance sheets), collections assistance, accounts payable assistance, and optional liaison services with professional employment organizations.
The Back Office Services Fee is a fixed amount that is subtracted directly from the franchisee's share and reflected on the franchisee's settlement statement. While the FDD mentions that the franchisee will pay a fixed Back Office Services Fee, the exact amount of this fee is not specified in the provided excerpts.
Prospective franchisees should note that while Management Recruiters provides collections assistance, the franchisee bears the ultimate responsibility for collections. Additionally, franchisees are required to advance funds to Management Recruiters for the payment of vendor invoices related to accounts payable assistance. Since the specific amount of the Back Office Services Fee is not detailed in the provided FDD excerpts, it is essential for potential franchisees to clarify this amount with Management Recruiters to fully understand the financial obligations associated with this fee.