36 CFR § 51.78 - Will a concession contract require a franchise fee and will the franchise fee be subject to adjustment?
(a) Concession contracts will provide for payment to the government of a franchise fee or other monetary consideration as determined by the Director upon consideration of the probable value to the concessioner of the privileges granted by the contract involved. This probable value will be based upon a reasonable opportunity for net profit in relation to capital invested, including any funds required to be placed in special accounts identified in § 51.81, and the obligations of the contract as described in the prospectus.
(b) Each prospectus shall include one of the following:
(1) A proposed franchise fee based on the probable value determination in the prospectus (“prospectus franchise fee”). The prospectus franchise fee should be set at a level to encourage competition for the concession opportunity through offers of either:
(i) Higher franchise fees; or
(ii) Lower franchise fees in combination with enhanced or higher quality service offerings that exceed prospectus requirements.
(2) Alternatively, when the Director determines that using a prospectus franchise fee is inappropriate for the particular concession opportunity, a minimum acceptable franchise fee based on the probable value determination and set at a level to encourage competition.
(c) In determining the minimum acceptable franchise fee or prospectus franchise fee to include in a prospectus, the Director shall use relevant industry data for similar operations (e.g., hospitality, recreation) and provide in the prospectus the basis for the determination of the minimum acceptable franchise fee or prospectus franchise fee. Consideration of revenue to the United States shall be subordinate to the objectives of protecting and preserving park areas and of providing necessary and appropriate services for public use and enjoyment of the park area in which they are located at reasonable rates.
(d) The franchise fee contained in a concession contract with a term of 5 years or less may not be adjusted during the term of the contract. Concession contracts with a term of more than 5 years will contain a provision that provides for adjustment of the contract's established franchise fee at the request of the concessioner or the Director. An adjustment will occur if the concessioner and the Director mutually determine that extraordinary, unanticipated changes occurred after the effective date of the contract that have affected or will significantly affect the probable value of the privileges granted by the contract. The concession contract will provide for arbitration if the Director and a concessioner cannot agree upon an appropriate adjustment to the franchise fee that reflects the extraordinary, unanticipated changes determined by the concessioner and the Director.