What happens to amounts owed to Big Blue Swim School upon termination of the agreement?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The Development Fee is:
- (a) consideration for the rights we grant you in this DRA and for reserving the Territory for you to the exclusion of others (subject to our rights in Section 8) while you are in compliance with this DRA;
- (b) fully earned by us when we and you sign this DRA; and
- (c) not refundable under any circumstances (except as provided in Section 8(c) below), even if you do not comply or attempt to comply with the Schedule and we then terminate this DRA
for that reason. However, each time you (or your Approved Affiliate) sign a franchise agreement for the next BIG BLUE Swim School to be constructed and developed within the Territory, we will apply the deposit related to that Swim School (which is part of the Development Fee) toward the initial franchise fee due for that Swim School (leaving only the balance of the initial franchise fee due at signing).
Source: Item 23 — RECEIPTS (FDD pages 76–278)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Development Fee paid to Big Blue Swim School is generally non-refundable. Specifically, the Development Fee serves as consideration for the rights granted to the franchisee for reserving a specific territory, excluding others from operating within that area while the franchisee complies with the Development Rights Agreement (DRA). This fee is considered fully earned by Big Blue Swim School once the DRA is signed by both parties.
Even if the franchisee fails to meet the development schedule outlined in the DRA, leading to termination, the Development Fee will not be refunded. However, when a franchisee signs a franchise agreement for a swim school within the territory, the deposit related to that swim school (a portion of the overall Development Fee) will be applied toward the initial franchise fee due for that specific swim school, with only the remaining balance of the initial franchise fee due at signing.
It's important to note that this non-refundability clause has a specific exception, referenced as "Section 8(c) below," but the details of this exception are not provided in the excerpt. A prospective Big Blue Swim School franchisee should carefully review the full DRA and franchise agreement, paying close attention to the conditions outlined in Section 8(c) to fully understand the circumstances under which a refund of the Development Fee might be possible. Understanding these terms is crucial before entering into an agreement with Big Blue Swim School.