When is the remaining $7,500 of the initial franchise fee due for a Big O Tires franchise?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Key Person New Store Incentive. An existing Big O franchisee shall be entitled to the following incentives if that existing franchisee opens a new store or converts a Big O competitor's store that has an existing book of business and the existing Big O franchisee makes one of its managers from its existing Big O Store ("Key Person") a 1/3rd or greater owner of the franchisee entity that will own the new or converted Store. The Key Person must have been employed by the existing franchisee for a minimum of three years in a managerial capacity, be approved by Big O as a new franchisee owner, and personally have $50,000 in operating capital invested in the new franchisee entity. We will reduce the initial franchise fee to $5,000, payable when the new franchisee entity signs the Franchise Agreement. We will reduce the standard royalty to 1% during the first 12 months of Store operation, 2% during the 13th to 24th month of Store operation, and 3% during the 25th to 36th month of Store operation, with the full royalty fee commencing on the 37th month of Store operation and continuing through the remainder of the term. You may receive up to $100,000 in financing to acquire initial tire inventory from RDCs only. We will match 50% of each dollar, up to $20,000, the amount you spend on opening advertising. We will match 50% of each dollar, up to $20,000, you spend on signage, painting and remodeling the Store. You will be required to spend the applicable funds within 12 months after opening for business and in accordance with any other conditions and deadlines determined by us. All matching funds will be provided in the form of a credit against your trade account for products purchased from us. This "Key Person New Store Incentive Program" and special royalty arrangements are described with more detail in Items 6 and 10, and are not assignable to others without our consent. If you qualify for this incentive, you and we will execute the incentive rider attached to the Franchise Agreement as Schedule 8.
New Franchisee Program. If you are a new franchisee who signs a Franchise Agreement by June 30, 2026, and opens a Store by June 30, 2027, you will pay the standard initial franchise fee of $17,500. We will reduce the standard royalty to 1% during the first 12 months of Store operation and 2% during the 13th to 24th month of Store operation, with the full royalty fee commencing on the 25th month of Store operation and continuing through the remainder of the term. We will provide the following financing assistance to acquire, open, and operate a Big O Store. You may receive up to $100,000 in financing to acquire initial tire inventory from RDCs only. We will match 50% of each dollar, up to $20,000, the amount you spend on opening advertising in the form of a credit against your trade account for products purchased from us. You will be required to spend the applicable funds within 12 months after opening for business and in accordance with any other conditions and deadlines determined by us. We will further pay for one hotel room and one economy air fare to the first Big O convention that takes place after you become a franchisee. These incentives and special royalty arrangements are described with more detail in Items 6 and 10, and are not assignable to others without our consent.
Source: Item 5 — INITIAL FEES (FDD pages 14–21)
What This Means (2025 FDD)
Based on the 2025 Big O Tires Franchise Disclosure Document, the timing of the remaining $7,500 of the initial franchise fee depends on specific circumstances related to incentive programs. For instance, under the Key Person New Store Incentive, an existing Big O Tires franchisee can open a new store or convert a competitor's store by making a manager (Key Person) a 1/3rd or greater owner in the new entity. In this case, the initial franchise fee is reduced to $5,000, payable when the new franchisee entity signs the Franchise Agreement, implying no further amount is due.
However, if a franchisee qualifies for a reduced initial franchise fee under the Additional Store Development Program or the Multi-Store Conversion Program, and subsequently fails to meet the ownership requirements for at least two years after acquiring the new franchise, they must pay Big O Tires the difference between the full initial franchise fee ($17,500) and the reduced fee they initially paid. This means the remaining balance would be due immediately when the franchisee no longer meets the ownership requirements.
Similarly, under the U.S. Military Veteran & First Responder Program, if a franchisee receives a waiver of the initial franchise fee but later fails to meet the ownership requirements for at least two years, they must pay the full initial franchise fee ($17,500) immediately at the time they no longer meet the ownership requirement. Therefore, the timing for paying the remaining $7,500 (or potentially the full $17,500) is contingent upon specific incentive programs and adherence to their respective conditions, particularly those related to ownership duration. Prospective franchisees should carefully review the terms of any incentive programs they participate in to understand the conditions that could trigger a requirement to pay the remaining balance of the initial franchise fee.