Item 6: Other Fees

What is Item 6

Item 6 of the Franchise Disclosure Document lists every recurring or conditional fee a franchisee is obligated to pay once the business is open. This includes:

• royalties

• marketing fund contributions

• technology fees

• renewal fees

• transfer fees

• audit fees

• late fees

• insurance requirements

• training fees for additional employees

Each fee must be detailed, explained and presented in the format required by the FTC Franchise Rule.

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Why Item 6 Matters

Item 6 defines the full cost of operating within the franchise system. It affects:

• profitability

• break even analysis

• performance forecasting

• operating cash flow

• franchisee financial expectations

Ongoing fees are often more impactful on long term franchisee success than initial fees.

Failure to disclose fees properly can lead to:

• enforcement actions

• state examiner denials

• rescission claims

• franchisee disputes

Item 6 does not include fees paid to third parties during the course of the franchise relationship and is limited to funds paid directly or indirectly to the franchisor or its affiliates.

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What Must Be Included in Item 6

Each fee must list:

• amount or formula

• when the fee is due

• whether the fee is refundable

• who receives the fee (franchisor, affiliate, marketing fund, AR, etc.)

• how the franchisor uses the fee (if applicable)

• whether fees may increase in the future

• minimum and maximum ranges

Franchisors must present Item 6 fees in a tabular format.

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Examiner Red Flags

Examiners scrutinize:

• ambiguous royalty formulas

• undefined marketing fund usage

• “as needed” fees without caps

• undisclosed technology pass through fees

• charges paid to affiliates

• fees described elsewhere that are missing in Item 6

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Related Terms

FDD Renewal
Material Change
Franchise Examiner
Franchise Exemption
Notice Filing State
Non Registration State
Registration Filing State
Stop Order

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Franchise Registration Management 
Franchise Territory Mapping
Demographic Analysis
Integrated Document Signing
CRM Tools

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