Are Royalty Fees applicable to Wind-Down Activities for a Casiola franchise?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
action, and Franchisee shall grant Franchisor 30 days from receipt of said notice to cure the alleged act upon which such legal action is to be based (hereinafter, the "30 Day Cure Notice"). Franchisee agrees that the 30 Day Cure Notice is a strict condition precedent to Franchisee commencing, or otherwise instituting, legal action or proceeding against Franchisor for any reason whatsoever.
ARTICLE 17 OBLIGATIONS UPON TERMINATION OR EXPIRATION
17.A. PAYMENT OF AMOUNTS OWED TO FRANCHISOR
Without limitation as to any other Article or provision of this Agreement, upon expiration or termination of this Agreement for any reason, Franchisee shall immediately pay to Franchisor all sums and fees due from Franchisee to Franchisor under the terms of this Agreement including, but not limited to Royalty Fees and Advertising Contributions and all other sums and fees due from Franchisee to Franchisor and/or Franchisor affiliates and/or suppliers for products and services including, but not limited to, System Supplies.
**17.B.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, upon the expiration or termination of the Franchise Agreement, a franchisee is obligated to pay all outstanding sums and fees to Casiola. This includes, but is not limited to, Royalty Fees, Advertising Contributions, and any other fees for products and services, such as System Supplies.
Specifically, even during the wind-down period, where the franchisee is completing services for customers with pre-existing rental agreements, the obligation to pay Royalty Fees continues unless otherwise directed by Casiola in writing. Casiola retains the right to determine the scope and nature of these wind-down activities.
This means that a franchisee must continue to pay Royalty Fees on revenue generated during the wind-down phase, which could impact the profitability of those final services. It is important for prospective franchisees to understand that the financial obligations to Casiola extend beyond the active operation of the franchise and include the period necessary to conclude existing customer agreements.