Why does Buff City Soap defer the collection of initial fees from California franchisees?

According to Buff City Soap's 2025 Franchise Disclosure Document, the collection of initial fees from California franchisees is deferred due to a determination by the California Department of Financial Protection and Innovation. The Department has determined that Buff City Soap has not demonstrated adequate capitalization and/or that it relies on franchise fees to fund its operations. As a result, the Commissioner has imposed a fee deferral condition.

This condition mandates that Buff City Soap must defer the collection of all initial fees from California franchisees until all pre-opening obligations are completed and the franchise is open for business. For franchisees in California who sign a development agreement, the payment of development and initial fees attributable to a specific unit in their development schedule is deferred until that specific unit is open.

This deferral provides a significant benefit to California franchisees, as they are not required to pay initial fees until the Buff City Soap location is ready to commence operations. This arrangement reduces the financial risk for the franchisee, as they are not investing heavily upfront before the business is operational. It also ensures that Buff City Soap is incentivized to provide the necessary support and fulfill its pre-opening obligations in a timely manner.