Which sections of the Monicals Pizza Franchise Agreement outline the franchisee's obligation to pay fees?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 5. INITIAL FEES
Franchise Agreement
You must pay a $45,000 lump sum franchise fee when you sign the Franchise Agreement. You pay a $30,000 lump sum franchise fee when you sign the Franchise Agreement for a second and subsequent
franchise. If you are a Monical's Pizza employee, you pay a lump sum franchise fee of $45,000, less $1,000 for every year of your employment with Monical's Pizza, with a minimum franchise fee of $25,000. Otherwise, the franchise fee is uniform for all franchisees.
We will refund 50% of the franchise fee you paid if we terminate the franchise for your failure to perform your pre-opening obligations under the Franchise Agreement. We do not give refunds under other circumstances.
We previously offered a standard royalty of 2% to one franchisee who renewed the Franchise agreement. We are no longer offering discounted royalties.
Development Agreement
You must pay a development fee if and when you sign a Development Agreement. The development fee is paid to us in a lump sum and is nonrefundable. The development fee is equal to $15,000 for each Monical's restaurant you agree to develop in addition to the franchise fee. The number of Monical's restaurants you will open will be determined before you sign the Development Agreement.
For example, assuming you agree to develop 5 Monical's restaurants, your initial investment will include a franchise fee of $30,000 for the first Monical's restaurant and a development fee of $60,000 for the remaining 4 Monical's restaurants to be developed in the future.
Each time you sign a Franchise Agreement for one of the additional Monical's restaurants, you must pay us $15,000 which is the balance of the discounted franchise fee for that franchise.
The development fee is calculated uniformly for all developers, but the amount of the actual fee will vary based on the number of Monical's restaurants you agree to develop.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 18–20)
What This Means (2025 FDD)
Based on the 2025 Monicals Pizza Franchise Disclosure Document, several sections within the franchise agreement detail the franchisee's obligation to pay fees. Item 5 outlines the initial franchise fee, which is a $45,000 lump sum due upon signing the Franchise Agreement. For franchisees acquiring subsequent franchises, the fee is reduced to $30,000. A discounted franchise fee is available for Monicals Pizza employees, calculated as $45,000 less $1,000 for each year of employment, with a minimum fee of $25,000. Additionally, if Monicals Pizza terminates the agreement due to the franchisee's failure to meet pre-opening obligations, 50% of the franchise fee is refundable.
If a franchisee enters into a Development Agreement, they must pay a development fee, which is a nonrefundable lump sum of $15,000 for each Monicals Pizza restaurant they agree to develop. For instance, agreeing to develop five restaurants would involve a $30,000 franchise fee for the first location and a $60,000 development fee for the remaining four. Each subsequent Franchise Agreement requires a payment of $15,000, representing the balance of the discounted franchise fee.
Item 23 also mentions fees related to termination. Upon termination of the agreement, the franchisee is obligated to pay all sums owed to Monicals Pizza and its affiliates. This includes unpaid royalty fees, damages, costs, and expenses, including reasonable attorneys' fees related to litigation, arbitration, or bankruptcy proceedings. Furthermore, the franchisee is responsible for covering costs and expenses incurred by Monicals Pizza in enforcing the agreement post-termination, such as obtaining injunctive relief. Section 4.3 states that the developer shall pay the Franchise Fee, less any applicable credit as provided in Section 3.1.