What are 'Continuing Fees' comprised of for a Management Recruiters franchise?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
e Cap Rate. For clarification, Contingent Contract Staffing Continuing Fees Credit does not include or accrue on any portion of Continuing Fees due on Contract Staffing Payroll for the portion of the hourly pay rate to an employee which does not exceed the Cap Rate.
"Continuing Fee Increase" shall have the meaning ascribed to it in Section 5.1.2.
"Continuing Fees" shall mean Contract Staffing Continuing Fees and Recruiter Continuing Fees, collectively.
"Contract Staffing Billing Threshold" means one million five hundred thousand dollars ($1,500,000.00).
"Contract Staffing Continuing Fees" shall mean a monetary amount equal to the sum of 4.5% of Contract Staffing Payroll plus 18% of the Gross Margin for temporary and contract employee staffing of the Franchise Business.
"Contract Staffing Gross Billings" shall mean gross amount of all invoices issued to clients resulting, directly or indirectly, from or in connection with all services, consultation, assistance, or sales provided from, or through, or attributable to the Contract Staffing Services (as opposed to Recruiter Services) of the Franchise Business regardless of whether such amounts are collectible or uncollectible and further regardless of where or to whom such services are provided, including without limitation, services of temporary employees, excluding bona fide refunds and adjustments.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, 'Continuing Fees' encompass both Contract Staffing Continuing Fees and Recruiter Continuing Fees.
Contract Staffing Continuing Fees are calculated as the sum of 4.5% of Contract Staffing Payroll plus 18% of the Gross Margin derived from temporary and contract employee staffing activities within the Franchise Business. Recruiter Continuing Fees are based on Net Cash In, with a tiered percentage structure: 9% on the first $500,000 of Net Cash In, 7% on Net Cash In from $500,001 to $1,000,000, 5% on Net Cash In from $1,000,001 to $2,000,000, and 3% on Net Cash In exceeding $2,000,001.
Additionally, Management Recruiters franchisees must pay a Minimum Annual Continuing Fee (MACF) of $12,000 per calendar year if their Gross Continuing Fees paid do not exceed this amount. Other fees include a Marketing and Public Relations Fee equal to 0.5% of Gross Funds and a Back Office Services Fee. These continuing fees are crucial for the ongoing operation of a Management Recruiters franchise, covering support, brand maintenance, and system access.