How does Management Recruiters determine the fees and rates for services under the agreement?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
_page_141_Picture_1.jpeg)
Exhibit B Computer Services Agreement
(See attached)
COMPUTER SERVICES AGREEMENT
THIS AGREEMENT, effective this [date], is entered into by and between HQ MRI Corporation ("Hire Quest"), a Delaware corporation having principal offices at Goose Creek, South Carolina, and the undersigned entity ("Client"). Client is a franchisee of Hire Quest pursuant to a separate written franchise agreement between the parties.
1. Engagement. Client retains Hire Quest or its Affiliate to host and process Client's Data on a non-exclusive basis in accordance with the services identified in Exhibit A (the "Services").
2. Service Fees and Taxes.
- (a) The fees for the Services shall be Hire Quest's then current fees and rates for the Services in effect on the effective date of this Agreement, as set forth in the attached Exhibit B, which is incorporated herein by reference. Such fees may be periodically adjusted by Hire Quest. Any rate changes deemed necessary by Hire Quest will become effective on the first day of July following the notification of said changes. Hire Quest will notify Client of any rate changes at least thirty (30) days prior to the effective date of any such changes.
- (b) Client shall pay all applicable taxes based on or in any way measured by this Agreement, the Services, or any portion thereof, or any services related thereto, excluding taxes based on Hire Quest's net income, but including personal property taxes and sales taxes, if any. If Client challenges the applicability of any such tax, it shall pay such tax to Hire Quest and Client may thereafter challenge such tax and seek refund thereof.
3. Term of Agreement
- (a) Unless otherwise terminated or cancelled as provided herein, the term of this Agreement shall be for the term of the separate written franchise agreement between the parties.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to the 2024 Management Recruiters Franchise Disclosure Document, the fees for services are based on Hire Quest's current fees and rates, which are detailed in Exhibit B of the agreement. These fees can be adjusted periodically by Hire Quest, with any changes becoming effective on the first day of July following notification. Management Recruiters will notify the client of these rate changes at least 30 days before they take effect.
In addition to service fees, clients are responsible for paying all applicable taxes related to the agreement, the services provided, or any related services. These taxes include personal property and sales taxes, but exclude taxes based on Hire Quest's net income. If a client disputes the applicability of any tax, they are required to pay the tax to Hire Quest and can then challenge the tax and seek a refund.
The "Cap Rate" is defined as an hourly rate determined solely by Management Recruiters, subject to economic factors and other conditions, and may be adjusted at any time at their discretion. The "Contract Staffing Continuing Fees" are 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. For "Recruiter Continuing Fees", Management Recruiters charges a continuing fee on any Net Cash in the following amounts: 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 that exceeds $2,000,001.
Prospective franchisees should carefully review Exhibit B of the agreement to understand the initial fee structure and pay close attention to any notifications regarding fee adjustments. Understanding how the "Cap Rate" is determined and how it might fluctuate is also crucial for financial planning. Franchisees should also be prepared to handle tax-related matters and potential disputes, ensuring they allocate resources for tax payments and potential challenges.