What is the Management Service Fee that C3 Wellness Spa charges if they appoint a manager?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor has the right to charge fees and expenses, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, equal to 20% of Gross Sales for management services (the "Management Service Fees").
Any determination as to whether or not Franchisor may elect to provide management services, if any, and the extent of such services, and/or the discontinuation thereof, shall be exclusively determined by Franchisor in Franchisor's Reasonable Business Judgment.
The Management Service Fee shall be immediately payable upon invoice by us.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, if the franchisor appoints a manager to oversee the Franchised Business, the franchisee will be required to pay a Management Service Fee. This fee is determined by C3 Wellness Spa in their reasonable business judgment and is equal to 20% of the Gross Sales.
This situation typically arises if the franchisee, or in the case of a corporate entity, the Managing Owner, dies or becomes permanently disabled and a replacement is not appointed and approved within a specified timeframe. In such cases, C3 Wellness Spa is authorized, but not required, to appoint a manager to maintain operations. The franchisee remains responsible for all obligations under the Franchise Agreement, even while the appointed manager is in place.
The Management Service Fee is payable immediately upon invoicing by C3 Wellness Spa. It's important to note that C3 Wellness Spa is not liable for any debts, losses, costs, or expenses incurred during the period their appointed manager is running the Franchised Business. The decision to provide management services, the extent of those services, and their discontinuation are all determined by C3 Wellness Spa in their reasonable business judgment.
For a prospective C3 Wellness Spa franchisee, this means that in certain circumstances, they could face a significant expense in the form of the Management Service Fee. Franchisees should ensure they have a plan in place to address potential management gaps due to unforeseen circumstances like death or disability, to avoid the franchisor needing to step in and impose this fee. Maintaining sufficient working capital is also crucial to fulfill obligations under the agreement, including the payment of this fee.