Sample Franchise Disclosure Document Item 5: Initial Fees Example

October 11, 2011

Sample Item 5-1: Initial Fees


All Belmont Muffler Shops franchisees pay a $42,000 lump sum franchise fee when they sign the franchise agreement. Belmont will refund the entire amount to you if we do not approve your application within 45 days. Belmont will refund $9,000 of this fee if you do not satisfactorily complete your two-week training. No refunds are available under any other circumstances.

Sample Item 5-2: Initial Fees


You must pay a franchise license fee of $1,000 per thousand licensed drivers who reside within your exclusive area when the franchise agreement is signed. The number of licensed drivers is determined by the latest abstract of the state agency which issues drivers’ licenses. The minimum fee is $20,000. When you send your application, you must pay a non-refundable $500 application fee. You must pay an additional $5,000 when you receive your equipment. The balance of your fee is payable in 12 equal monthly installments of $1250 in the case of the minimum fee. The first installment payment is due 1 year after your shop opens. Belmont charges 10% interest, on an annual basis, on the unpaid balance. Interest compounds daily and accrues from the date that you receive your equipment. All buyers pay this uniform fee and receive the same financing terms on the fee. If your application is not accepted, Belmont retains the $500 for investigative costs, but you are not liable for the remainder of the initial fee. Belmont does not give refunds under any other circumstances.

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