FDD Item 6
Other Fees
FDD Item 6 discloses all recurring and contingent fees the franchisee will pay during the franchise relationship. Includes royalties, ad fund contributions, technology fees, training fees, transfer fees, renewal fees, and any other charges.
Why It Matters
Item 6 is the full ongoing-cost picture. It tells you what the franchisee pays on a recurring basis — typically 6-10% of revenue combined in royalties and ad fund — plus contingent fees for transfers, renewals, training, and other events.
What Item 6 Must Disclose
- Royalty rate and calculation basis
- Ad fund / brand fund contribution rate
- Technology, software, and platform fees
- Training fees for additional or replacement employees
- Transfer fees on sale or assignment
- Renewal fees at end of term
- Other recurring or contingent fees (audit, insurance, supplies, etc.)
What to Look For
- Combined royalty + ad fund above 10% is a structural pressure on unit-level profit
- Minimum royalty floors — a fixed dollar minimum that hurts in low-revenue periods
- Transfer fees above 25% of the then-current franchise fee — limits exit flexibility
Go Deeper
FDD Item 6 'Other Fees' Decoded: The Recurring Costs Most Buyers Miss
Item 6 is where franchisors disclose every fee a franchisee may have to pay beyond the upfront cost. The royalty and ad-fund lines get all the attention. The 15 other line items in Item 6 are where buyer surprises live.