Is the initial franchise fee for Big O Tires fully earned when charged?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 5 INITIAL FEES
Except as described below, the initial franchise fee is $17,500 and is due as follows: (i) $10,000 when you submit to us a franchise application and sign a Franchise Deposit Receipt Agreement, a copy of which is attached to this disclosure document as Exhibit E; and (ii) $7,500 when you sign the Franchise Agreement and before you commence your training.
Except as provided in this paragraph, the initial franchise fee, including the deposit, is fully earned when charged and is non-refundable under any circumstances. First, if we do not approve the
franchise application, we will refund the initial
Source: Item 5 — INITIAL FEES (FDD pages 14–21)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the initial franchise fee of $17,500 is generally considered fully earned when charged and is non-refundable. The fee is paid in two installments: $10,000 is due when the franchise application and Franchise Deposit Receipt Agreement are submitted, and the remaining $7,500 is due when the Franchise Agreement is signed and before training commences. This policy means that once Big O Tires charges the initial fee, it is considered earned and will not be refunded to the franchisee, with a specific exception.
However, there is an exception to this general rule. If Big O Tires does not approve the franchise application, the initial franchise fee will be refunded. This is a crucial consideration for prospective franchisees, as it provides a degree of financial protection during the initial application phase.
This "earned when charged" policy is fairly standard in the franchise industry, as the franchisor incurs costs in evaluating the application, providing initial support, and preparing for the new franchise location. The non-refundable nature of the fee (except in the case of application disapproval) underscores the importance of thorough due diligence and careful consideration before committing to a Big O Tires franchise. Prospective franchisees should be confident in their decision and financial readiness before signing the Franchise Agreement and paying the full initial franchise fee.