If Monicals Pizza assumes operation of the Franchised Restaurant following the death or incapacity of a franchisee, what management fee can they charge?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
ations.
18.6.2 Following such a death or Incapacity of such person as described in this Section 18.6, if necessary in Franchisor's discretion, Franchisor shall have the right, but not the obligation, to assume operation of the Franchised Restaurant until the deceased or incapacitated owner's interest is transferred to a third party approved by Franchisor. Franchisor may charge a management fee as stated in the Confidential Operations Manual from time to time, currently equal to FIVE HUNDRED DOLLARS ($500.00) per day, and Franchisor shall further be entitled to reimbursement of any expenses Franchisor incurs that are not paid out of the operating cash flow of the Franchised Res
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, in the event of the death or incapacity of a franchisee, Monicals Pizza has the right, but not the obligation, to assume operation of the franchised restaurant until the deceased or incapacitated owner's interest is transferred to a third party approved by them.
Monicals Pizza may charge a management fee for assuming operations. The management fee is specified in the Confidential Operations Manual, and the current fee is $500 per day. In addition to the management fee, Monicals Pizza is entitled to reimbursement for any expenses they incur that are not covered by the operating cash flow of the restaurant.
This means that if Monicals Pizza steps in to manage the restaurant, the franchisee's estate or the franchisee themselves (in case of incapacity) will be responsible for paying this daily management fee, as well as reimbursing any additional expenses incurred by Monicals Pizza that the restaurant's cash flow doesn't cover. This could significantly impact the profitability of the restaurant during the transition period and should be carefully considered by potential franchisees.