When is the initial fee collected for an All States M.E.D. franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
d locations and we, in reliance on your representations, have approved your franchise application to do so in accordance with this Agreement.
In consideration of the foregoing and the mutual covenants and consideration below, you and we agree as follows:
1. GRANT OF DEVELOPMENT RIGHTS
We grant to you, under the terms and conditions of this Agreement, the right to develop and operate NUMBER (#) of franchised locations (each a "Location", and collectively, the "Locations") within the territory described on Appendix A ("Development Territory").
2. DEVELOPMENT FEE
You must pay a Development Fee as described below:
As consideration for the rights granted in this Agreement, you must pay us the Initial Franchise Fee stated in the Franchise Agreement at the time you sign this Agreement for the first territory to be developed under this Agreement and one-half of the Initial Franchise Fee for each subsequent Location to be developed under this Agreement.
The Development Fee is consideration for this Agreement and not consideration for any Franchise Agreement, is fully earned by us upon execution of this Agreement and is non-refundable.
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 initial franchise fee is due when the Area Development Agreement is signed. Specifically, the franchisee must pay the initial franchise fee stated in the Franchise Agreement when signing the agreement for the first territory to be developed. For each subsequent location to be developed under the Area Development Agreement, the franchisee must pay one-half of the initial franchise fee.
For franchisees entering into an Area Development Agreement, the balance of the initial franchise fee for the first location must be paid when the agreement and the Franchise Agreement for the first location are executed. The balance of the initial franchise fee for each subsequent location is due upon entering into a Franchise Agreement for each additional location.
However, there is an exception for franchises governed by the Illinois Franchise Disclosure Act. In Illinois, the collection of all initial fees is deferred 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 deferred until the first franchise business opens. This deferral is imposed by the Illinois Attorney General's Office due to All States M.E.D.'s financial condition.