Franchise Fee when purchasing at LEGO Brand Store

brickmatic

I just noticed on my receipt from the LEGO Brand Store in Elizabeth, NJ that they tacked on a 3.00% Franchise Fee to the total. I haven't seen this on previous receipts. Does anyone know what this fee is?

Kanohi

Negates the lower sales tax too...

DaddyDeuce

Jersey Gardens mall has a 3% Elizabeth City franchise fee. It doesn't apply to clothing, but it does apply to hard goods (including toys).

Effectively it is another word for "sales tax".

brickmatic

Ok, that makes sense. The store wasn't charging it back in July, so I guess it came as a surprise to the store too.

Now, since the fee is tied to the development of the mall, it only applies to the mall. I could avoid the franchise fee and still get the UEZ rate by going down the street to TRU, but with TRU's inflated prices the mall is still a better deal.

bluedragon

I have to go to NJ this weekend and was thinking of taking advantage of the lower sales tax and get my Manhunter there. I would like to avoid this franchise fee by going to the Bridgewater Lego store. Does any one know if they also charge a fee? I believe it is also in a mall.

Thanks!

hleonffu

NJ tax rate is 7%. It is 3.5% at Elizabeth, except for the additional fee noted above. This brings the total tax to 6.5%. This makes the Elizabeth store the cheapest in NJ.

bluedragon

^Thank you! That's very helpful as that is the most convenient for me to get to anyway.

madforLEGO

Wonder if stores do this to keep them all 'equal' in terms of sales tax in order to not have one store get more business than another store in the state/area? For example, in the Chicagoland area, I am fairly certain that many LEGO stores are located in Cook County and not in surrounding counties due to the high sales tax in Cook. and if a store opened in an adjoining county the tax would be a lot lower. Though not sure if Gurnee is in Cook or not or if they have this 'franchise fee' I know my Schaumburg receipt does not have anything about a 'franchise fee' on it anywhere

brickmatic

No, the fee is a result of the deal given to the developer of the mall. The fee is accessed by the city and recoups costs the city incurred when developing the mall. The lower tax rate is a result of an incentive program at the state level to bring business to poor areas. Any store within the Urban Enterprise Zone can charge half state taxes. That's why the really large ToysRUs and Ikea nearby charge 3.5% tax and no fee because they aren't part of the mall.

bluedragon

Thanks for your help. I went for the trio... Ikea, TRU and Lego store. TRU had #79011 at $15, which was nice with the lower tax. Also got the SW microfighters from the Lego store to get the Manhunter.