Under what condition is the $10,000 franchise application fee refundable from Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Applicant must pay $10,000 of the initial franchise fee when it submits its franchise application. The remainder is due when Applicant signs the Franchise Agreement. In the event the initial franchise fee is waived or reduced below $10,000 based on Applicant participating in an applicable incentive program, Big O will credit that portion of the $10,000 Applicant has paid that exceeds the initial franchise fee toward Applicant's accounts receivable for products purchased from Big O. The initial franchise fee is not refundable except that the $10,000 paid by Applicant at the time the franchise application is submitted to Big O is refundable if Big O does not approve Applicant's franchise application.
2.01 Grant of Franchise. Subject to all of the terms and conditions herein, including but not limited to, the condition that Franchisee or its Owners or some of them, personally guarantee the obligations of Franchisee to Big O under this Agreement as set forth in Schedule 3 to this Agreement, Big O grants to Franchisee the non-exclusive and non-divisible license to use the Licensed Marks and the exclusive right to operate a Franchised Business solely at the Premises set forth in Schedule 1 to this Agreement (the "Franchise"). If, at the time of execution of this Agreement, the Premises cannot be designated as a specific address because a location has not been selected by Franchisee and approved by Big O, then Franchisee shall promptly take steps to choose and acquire a location for its Big O Store within the following city, county or other geographical area:
("Designated Area"). In such circumstances, Franchisee shall select and submit to Big O for approval a specific location for the Premises, which shall hereinafter be set forth in Schedule 1. Franchisee must select and obtain Big O's approval of the Premises within twelve (12) months of the Effective Date or Big O may terminate this Agreement pursuant to Section 19.01(r) in which case, upon receipt from Franchisee of a general release in a form approved by Big O, Big O will refund $10,000.00 of the initial franchise fee paid by Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires's 2025 Franchise Disclosure Document, the $10,000 franchise application fee is refundable under specific circumstances. Specifically, if Big O Tires does not approve an applicant's franchise application, the $10,000 paid at the time of submission is refundable. This means that if Big O Tires reviews the application and decides not to grant the franchise, the applicant will receive their $10,000 back.
Additionally, if at the time of the execution of the Franchise Agreement, the premises cannot be designated because a location has not been selected by the franchisee and approved by Big O Tires, the franchisee has twelve months from the effective date to select and obtain approval for the premises. If the franchisee fails to do so, Big O Tires may terminate the agreement and will refund $10,000 of the initial franchise fee, upon receipt of a general release from the franchisee.
It is important to note that once Big O Tires approves the franchise application, the entire franchise deposit is considered earned by Big O Tires in consideration of their investigation and approval of the application. This implies that after approval, the deposit is non-refundable, highlighting the importance of understanding the terms and conditions before submitting the application and the initial $10,000.