Are the initial franchise fees for Bath Tune Up refundable?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Initial franchise fees – consist of fees paid by franchisees at the start of the franchise or area development agreement. Each of these fees are fixed and nonrefundable and are due at the time the agreement is entered into. As allowed by ASC 606 and ASC 952 for private companies, preopening services provided to a franchisee are distinct from the franchise license and are recognized as a single performance obligation. This performance obligation is considered complete and revenue recognized typically when the franchisee has completed their initial training which is normally within six months of entering into the agreement. A deferred revenue liability is recorded for deposits of initial franchise fees that have not yet been recognized in Deferred revenue on the Balance Sheets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the initial franchise fees are generally not refundable. The FDD states that these fees are fixed and nonrefundable, and they are due when the franchise or area development agreement is signed. This means that once you pay the initial franchise fee to Bath Tune Up, you typically cannot get it back, even if you later decide not to proceed with opening the franchise.
Bath Tune Up recognizes the initial franchise fee as revenue upon completing their contractual obligations, which usually involves completing the initial training. Until the training is complete, the initial franchise fees are recorded as deferred revenue.
As a prospective franchisee, it's crucial to understand this non-refundable policy before signing any agreements or paying any fees to Bath Tune Up. You should carefully consider your decision and conduct thorough due diligence before committing to the franchise. It would be prudent to confirm this policy with the franchisor directly and to seek legal counsel to fully understand the implications of this non-refundable fee.