If a California franchisee signs a development agreement with Casiola, when is the payment of development and initial fees attributable to a specific unit deferred until?

According to Casiola's 2024 Franchise Disclosure Document, for California franchisees who enter into a development agreement, the payment of development and initial fees for each specific unit is deferred until that particular unit is open for business. This deferral is due to a condition imposed by the California Commissioner, who determined that Casiola had not demonstrated adequate capitalization and/or was relying on franchise fees to fund operations.

This arrangement is beneficial for California franchisees as it reduces their upfront financial burden. Instead of paying the fees before the unit is operational, franchisees can use those funds for initial setup and operational costs. This can significantly ease cash flow constraints during the critical early stages of the business.

However, it's important to note that this deferral is specific to California franchisees and is contingent upon the unit actually opening. If a unit in the development schedule does not open, the fees may still become due at some point, depending on the terms of the development agreement. Prospective franchisees should carefully review the development agreement to understand the specific conditions under which the deferred fees become payable.