Item 5: Franchise Fees
Content: Simply the disclosure of all fees that must be paid to the franchisor prior to opening the business, the timing of the payment and whether there is any refundable aspect of the fees.
Purpose: While simple, the item should not be overlooked, as it clearly spells out what the franchisee must pay the franchisor.
Tips & Advice: Generally there are two types of fees that are normally paid prior to opening. The first is a franchise/territory/training fee. Some franchisors wrap this into one fee, others separate the payment for tax and reporting purposes. The other type of payment is product, material or equipment that must be purchased from the franchisor. If the franchisor is in the business of selling you material or equipment, you will be made aware of this fact here in Item 5.