Is the Franchise Fee refundable to the franchisee after paying All States M.E.D. upon execution of the Franchise Agreement?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
usiness under a different trademark which such business sells or will sell goods or services similar to those you will offer, but we reserve the right to do so.
3. FEES
3.1 Franchise Fee
Upon execution of this Agreement, Franchisee shall pay a fee ("Franchise Fee") to Franchisor of $100,000. The Franchise Fee shall be deemed fully earned upon execution of this Agreement and is nonrefundable. The Franchise Fee is payment, in part, for expenses incurred by Franchisor in furnishing
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 franchise fee is generally nonrefundable. Specifically, upon the execution of the Franchise Agreement, the franchisee must pay All States M.E.D. a franchise fee of $100,000. This fee is deemed fully earned by All States M.E.D. upon the agreement's execution and is nonrefundable.
This means that once the Franchise Agreement is signed and the $100,000 franchise fee is paid, the franchisee cannot get this money back, regardless of whether they later decide not to open the franchise or if the franchise fails. This is a standard practice in franchising, as the fee compensates the franchisor for the initial costs and efforts in setting up the franchisee, including training, marketing, and legal expenses.
However, there is an exception for franchisees in Illinois. The Illinois Addendum to the Franchise Agreement modifies the standard terms to defer collection of all initial fees until All States M.E.D. has satisfied its pre-opening obligations to the franchisee and the franchisee has commenced business under the Franchise Agreement. Payment of the Development Fee is also deferred until the first franchise business opens. This deferral was imposed by the Illinois Attorney General's Office due to All States M.E.D.'s financial condition. Therefore, in Illinois, the franchise fee is not paid upfront and is deferred until certain conditions are met.