Why does All States M.E.D. defer the collection of initial fees?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Initial Fee Deferral. Item 5 of the Disclosure Document is modified to also provide that we defer collection of all initial fees until we have satisfied our pre-opening obligations to you and you have commenced doing business under the Franchise Agreement. Payment of the Development Fee is deferred until the first franchise business opens. The Illinois Attorney General's Office imposed this deferral requirement due to our financial condition.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the franchisor defers the collection of initial fees in Illinois due to a requirement imposed by the Illinois Attorney General's Office because of All States M.E.D.'s financial condition. This deferral applies until All States M.E.D. has fulfilled its pre-opening obligations to the franchisee and the franchisee has started business operations under the Franchise Agreement.
This deferral of initial fees is a significant benefit for prospective All States M.E.D. franchisees in Illinois. It reduces the upfront financial burden and risk, as franchisees do not have to pay the fees until All States M.E.D. has provided the necessary support to get their business up and running. This arrangement aligns the franchisor's interests with the franchisee's success, as All States M.E.D. is incentivized to provide effective pre-opening support.
However, it is important to note that this deferral is specific to Illinois and is a result of the Illinois Attorney General's Office intervention due to All States M.E.D.'s financial condition. Franchisees in other states may not receive the same benefit and will need to pay the initial fees as outlined in Item 5 of the Disclosure Document. Prospective franchisees should carefully review the addenda specific to their state and consult with All States M.E.D. to understand the fee payment schedule applicable to them.