# Professional fees

Professional fees are the lawyers, accountants, and sometimes the consultants
paid to form the entity, read the FDD, close the lease, and set up the books.
Architecture and project management can sit in this bucket or in construction,
depending on the filing. Comparing only the rows labelled “professional” will
miss the design fees that another brand put next to leasehold improvements.

The league table at the end of this chapter includes only professional-bucket
rows. Great Greek will not be in it. GDK, Shah's, Mad for Chicken, and 375°
will.

## The disclosed professional-fee rows

| Brand | Filing label | Low | High |
| --- | --- | ---: | ---: |
| German Doner Kebab | Professional Fees | $10,000 | $15,000 |
| Shah's Halal Food | Legal & Accounting | $3,000 | $6,000 |
| Mad for Chicken | Professional Fees | $2,500 | $7,000 |
| 375° Chicken 'n Fries | Professional Fees | $2,000 | $5,000 |

GDK's $10,000–$15,000 is the highest band. Shah's names the professions:
legal and accounting, $3,000–$6,000. Mad for Chicken and 375° use the generic
label at different amounts. None of these rows is the architect.

## Design fees live next door

Architecture and project management in the same filings:

| Brand | Filing label | Bucket | Low | High |
| --- | --- | --- | ---: | ---: |
| German Doner Kebab | Architects and Project Manager Fees | construction | $30,000 | $50,000 |
| The Great Greek | Design and Project Management Fee | construction | $10,000 | $10,000 |
| Mad for Chicken | Architectural Plans | construction | $10,000 | $20,000 |
| 375° Chicken 'n Fries | Architectural Plans | construction | $8,000 | $12,000 |

Adding GDK's professional fees to its architect row produces
$40,000–$65,000 of named professional-looking costs. That addition is fair
inside the filing because both rows exist. Calling the sum “professional fees”
for comparison with Shah's $3,000–$6,000 is not: Shah's build-out of
$80,000–$160,000 may include design, or design may be extra. Minnesota's
public [Shah's Halal
filing](https://cards.web.commerce.state.mn.us/documents/%7B9078B29B-0000-C21E-982F-C2FDAFB07783%7D/download?contentSequence=0&documentClass=FRANCHISE_REGISTRATIONS)
is the document that either says so in a footnote or does not.

Great Greek's design fee is a flat $10,000 in construction. There is no
separate legal-and-accounting line. Entity formation, FDD review, and lease
negotiation are still cash events. They may sit in **Opening Assistance**
($500–$2,000), in additional funds ($35,000–$75,000), or outside the table.
A filed [Great Greek
disclosure](https://cards.web.commerce.state.mn.us/documents/%7B40DC349A-0000-CFD3-B1AA-6F584E40E621%7D/download?contentSequence=0&documentClass=FRANCHISE_REGISTRATIONS)
does not invent a $6,000 legal row to match Shah's label.

## What the row has to cover in a real closing

A usable professional-fee budget is a list of engagements, not a single cell:

1. Franchise counsel to review the FDD and the franchise agreement, including
   development-schedule terms. GDK's table is per outlet inside a five-outlet
   minimum; that structure is a legal-review item, not an Item 7 curiosity.
2. Entity formation and, where relevant, a review of the franchisor's required
   entity structure.
3. Lease counsel, which is a different job from franchise counsel. The City of
   Seattle's [commercial lease
   tool](https://www.seattle.gov/documents/departments/economicdevelopment/oisi/english%20final%20full%20lease%20tool.pdf)
   is a question list, not a substitute for that engagement.
4. Accountant for entity elections, sales-tax registration, and the chart of
   accounts the franchisor's reporting will require.
5. Architect and, if required, a branded design firm — already a separate
   construction row in four of the five itemised filings.
6. Consultants the buyer actually hires (site, immigration, liquor, if any)
   that Item 7 did not name.

Shah's $3,000 low will not pay for franchise counsel, lease counsel, and an
accountant in most markets if all three are used. The $6,000 high may not
either. That is not a finding that Shah's under-discloses; it is a finding
that the row is an estimate of a class of cost, and the buyer's engagement
letters are the bid. The FTC's [consumer
guide](https://search.ftc.gov/system/files/documents/plain-language/591a_buying_a_franchise_sept_2020.pdf)
treats independent professional advice as part of buying a franchise, not as
optional garnish on Item 7.

## Worked example: do not treat the fee as optional because it is small

375°'s professional fees of $2,000–$5,000 are 1 percent of a $521,500 high
total. GDK's $15,000 high is 1 percent of $1,123,000. The shares match; the
dollars do not, and neither share measures the cost of a bad lease. A
[tenant-improvement allowance](/tenant-improvement-allowance/) clause that
reimburses after opening, or a rent-commencement date that starts on delivery
of a shell, will move more money than any professional-fee row in this
dataset. Paying counsel to read those clauses is the point of the row.

Mad for Chicken's professional fees of $2,500–$7,000 sit next to architectural
plans of $10,000–$20,000 and additional funds of $51,375–$162,000. The wide
operating reserve is not a substitute for a lease review completed before the
reserve is needed.

## Professional-fees checklist

1. Copy the professional-bucket label, and separately copy any architect or
   design row from construction.
2. List franchise counsel, lease counsel, accountant, and architect as four
   engagements.
3. For Great Greek, note the $10,000 design fee and the absence of a legal
   row, then budget counsel anyway.
4. Keep [licenses and permits](/licenses-and-permits/) on their own line;
   expediters are not always inside professional fees.
5. Put the engagement letters next to the Item 7 range and explain the
   difference, as the [worksheet](/item-7-worksheet/) requires for every
   other row.

## Formation, tax elections, and the franchisor's reporting pack

Entity formation is cheap relative to GDK's $10,000–$15,000 professional-fee
band and expensive relative to 375°'s $2,000 low if it includes an operating
agreement, an EIN, state foreign qualification, and a registered-agent year.
S-corporation or partnership elections, where they are used, have deadlines
that do not care about the construction schedule. The franchisor's required
chart of accounts and royalty-reporting pack may need a bookkeeper from
month one, which is an operating cost that Item 7 professional fees only
sometimes include.

Sales-tax registration, employer accounts, and — where relevant — local
business-tax accounts are licenses as well as professional work. The
[licenses and permits](/licenses-and-permits/) row may already estimate the
filing fees. The accountant's time to complete them is this row. Shah's
**Legal & Accounting** of $3,000–$6,000 is the only itemised label that names
both professions. Budget both anyway.

Site-selection or broker work is easy to park here and often belongs in real
estate. GDK's **Property Agent** row is $0–$0. Great Greek's **Real Estate
Service Charge** is $0–$3,500. Those are the filings that already made a
place for brokerage. Putting a $15,000 tenant-rep fee into professional fees
because GDK's property-agent cell is zero would misread a disclosed zero.

Immigration, liquor, and environmental consultants are project-specific.
None of the five itemised tables names them. If the site needs a Phase I or
a traffic study, that invoice is extra. It is not Shah's miscellaneous
opening costs unless the footnote says so.

A franchise agreement that requires mediation or a designated venue is a
counsel question before travel budgets are set, not after. That review is
this row, even when 375° printed $2,000 as the low. Entity-formation invoices
and lease-counsel retainers are usually due before the franchise fee itself,
not after possession.

The injected comparison below sorts professional-bucket rows by high estimate.
It will not include Great Greek's design fee. That fee is in
[construction](/construction/), where the filing put it.

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HTML: https://donerhandbook.com/professional-fees/