# Franchise fee

The initial franchise fee is the one Item 7 row that should match Item 5. It
is paid to the franchisor for the right to open, not for construction,
equipment, or inventory. A low column that is smaller than the stated first-time
fee is usually a discount for a defined class of buyer, not a negotiation
target printed for everyone.

The FTC's [Franchise Rule compliance
guide](https://www.ftc.gov/system/files/documents/plain-language/bus70-franchise-rule-compliance-guide.pdf)
requires fees paid to the franchisor to reconcile across the disclosure items.
The buyer's job is to notice when the Item 7 low is not the fee the reader
will pay.

## Itemised franchise-fee rows

| Brand | Filing label | Low | High | First-time fee on the brand record |
| --- | --- | ---: | ---: | ---: |
| German Doner Kebab | Initial Franchise Fee | $30,000 | $30,000 | $30,000 |
| Shah's Halal Food | Initial Franchise Fee | $30,000 | $30,000 | $30,000 |
| The Great Greek | Initial franchise fee | $35,550 | $39,500 | $39,500 |
| Mad for Chicken | Initial Franchise Fee | $35,000 | $35,000 | $35,000 |
| 375° Chicken 'n Fries | Initial Franchise Fee | $40,000 | $40,000 | $40,000 |

Great Greek is the worked example. The 2023 filing's Item 7 low uses $35,550.
The first-time fee is $39,500. The $3,950 difference is a discount available
to owners of affiliated brands. A reader who is not in that class should carry
$39,500 into the opening budget and should not treat $582,014 — the printed
Item 7 low — as available either, because that total is built on the
discounted fee. Adding $3,950 to $582,014 gives $585,964 as the low-end total
a first-time buyer would reconstruct from the same rows. That reconstruction
is arithmetic on disclosed numbers; it is not a new filing.

GDK, Shah's, Mad for Chicken, and 375° print the same number in both columns.
Those are fixed fees in Item 7, not ranges. They can still change in a later
FDD, and they can still be reduced by a negotiated incentive that is not in
the table. The disclosed figure is the starting point.

Döner Haus's brand record lists a $35,000 initial fee and an Item 7 range of
$359,500–$586,000 without a line-item schedule here. The fee is a fact about
the offering; it is not a row that can be subtracted from the range to reverse-engineer
the rest of the budget.

## When the fee is disclosed as none

bluTaco's 2024 comparative-study record lists the initial fee as none. There
is no Item 7 worksheet for bluTaco in this dataset, so there is no franchise-fee
row to put in the league table. “None” is a disclosure about Item 5, not a
$0 construction project. The same record notes that no royalty rate is
disclosed and that the agreement runs until either party terminates it. A
buyer who treats a missing initial fee as a cheap opening has skipped Items 6
and 7.

Other first-time fees in the broader brand set, for context around the
itemised rows above, are The Halal Guys at $60,000, Pepper Lunch at $50,000,
Crave Hot Dogs and BBQ at $45,000, Dog Haus and Capriotti's at $40,000,
Wienerschnitzel at $32,000, and Doner Shack with no current U.S. offering.
Those figures are from the brand records and their stated sources; they are
not Item 7 line items in this directory.

## What the fee does not buy

The franchise fee is not training travel, not opening inventory, and not the
grand-opening campaign. GDK lists **Initial Training** at $5,000–$10,000 and
**Opening Inventory** at $15,000–$20,000 as separate rows. Shah's lists
**Travel Expenses to Attend Training** at $2,000–$20,000. Great Greek lists
**Travel and Living Expenses (while attending training)** at $10,000–$20,000.
375° lists **Your Training Expenses** at $100–$5,000. Folding those into “the
fee” makes Item 7 look simpler and the cash plan worse.

Refundability is a footnote question. Some fees are earned on signing, some
are refundable if a site is not approved, some are credited against a
development schedule. GDK's table is per outlet inside a five-outlet minimum;
the $30,000 cell is the per-outlet fee in that structure, not a standalone
single-store offering. Item 5 and the development agreement, not the Item 7
cell alone, state how many fees are due and when.

Transfer and renewal fees are later events. GDK discloses a transfer fee of
5 percent of the sale price and a renewal fee of 50 percent of the then-current
franchise fee. Great Greek's transfer fee is the greater of $29,500 or 10
percent of the sale price, capped at the then-current franchise fee, with a
$2,500 renewal fee on a 35-year term. Those amounts do not belong in the
opening Item 7 total. They belong in the exit and renewal model.

## Worked example: fee share of the high total

| Brand | Fee (high column) | Item 7 high | Fee as share of high |
| --- | ---: | ---: | ---: |
| German Doner Kebab | $30,000 | $1,123,000 | 3% |
| Shah's Halal Food | $30,000 | $405,000 | 7% |
| The Great Greek | $39,500 | $1,088,560 | 4% |
| Mad for Chicken | $35,000 | $687,700 | 5% |
| 375° Chicken 'n Fries | $40,000 | $521,500 | 8% |

Shah's and 375° show the largest fee shares because their totals are smaller,
not because the fee is unusually high. GDK's $30,000 is the same dollar amount
as Shah's and a smaller share of a larger build. Ranking brands by fee share
without looking at construction is how a $10,000 difference in Item 5 crowds
out a $400,000 difference in leasehold improvements.

## Franchise-fee checklist

1. Read Item 5 and the Item 7 fee row together. They should name the same
   amount for a first-time buyer.
2. If the Item 7 low is lower, as with Great Greek's $35,550, write down who
   qualifies for the discount.
3. Separate training travel, inventory, and grand opening from the fee.
4. Check refundability, development-schedule multipliers, and when the fee is
   due.
5. Leave transfer and renewal fees off the opening worksheet.
6. For offerings with no Item 7 rows, keep the Item 5 fee as a fee — do not
   invent the rest of the table around it.

## Multi-unit schedules and the fee that is due more than once

GDK's Item 7 is per outlet inside a five-outlet minimum. Five times $30,000
is $150,000 of fees if each outlet pays the disclosed amount, before any
development-schedule incentive the FDD may describe in Item 5. This directory
does not print a five-store total, because the table is an outlet table.
A buyer signing that development schedule still has to multiply the fee,
and then decide whether construction, equipment, and additional funds
multiply the same way — they will not, site by site.

Resale of an existing outlet substitutes a transfer fee for some or all of
the initial fee, and substitutes a going-concern price for some construction.
GDK's transfer fee is 5 percent of the sale price; Great Greek's is the
greater of $29,500 or 10 percent, capped at the then-current franchise fee;
Shah's is 50 percent of the then-current franchise fee. Those are not Item 7
opening rows for a new build. A buyer of a resale should not use this
chapter's league table as the price of the store.

The injected comparison below sorts the itemised franchise-fee rows by high
estimate. bluTaco will not be in it. Great Greek's row will show the filing's
$35,550–$39,500 band; a first-time buyer still pays the high end of that band.

---
HTML: https://donerhandbook.com/franchise-fee/