What does the initial fee for a Chem Dry franchise consist of?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
A. INITIAL LICENSE FEE
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- FRANCHISEE agrees to pay a non-recurring and non-refundable initial fee (the "Initial Fee") comprised of the following:
- a. An initial license fee in the amount as set for on the Summary Page of this Agreement for the right to use the Marks during the term of this Agreement (the "Initial License Fee"); and
- b. An initial advertising, cleaning solution, and equipment package fee in the amount as set forth on the Summary Page of this Agreement, not including state or local taxes, which can vary, (the "Initial Package").
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- If CDI agrees to finance the Initial License Fee, FRANCHISEE shall pay a down payment in the amount as set forth on the Summary Page when FRANCHISEE signs this Agreement and FRANCHISEE will sign and deliver to CDI FRANCHISEE'S Business Note (the "Business Note") for the balance of the Initial License Fee. The Business Note is payable whether or not this Agreement terminates and is not subject to any claim, set off or defenses arising under this Agreement. CDI may assign, pledge or transfer the Business Note to a third party without notice to FRANCHISEE.
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- Upon execution of this Agreement by CDI, the Initial License Fee shall be deemed fully earned and non-refundable.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the initial fee consists of two parts. The first part is the initial license fee, which grants the franchisee the right to use Chem Dry's trademarks during the term of the agreement. The second part is the initial package fee, which covers advertising, cleaning solutions, and equipment. It's important to note that state or local taxes are not included in the initial package fee and can vary. The specific amounts for both the initial license fee and the initial package fee are detailed on the Summary Page of the Franchise Agreement.
Chem Dry may offer financing for the initial license fee. If financing is provided, the franchisee will make a down payment as specified on the Summary Page and sign a Business Note for the remaining balance. This Business Note is payable regardless of whether the Franchise Agreement is terminated and is not subject to any claims or defenses arising from the agreement. Chem Dry retains the right to assign or transfer the Business Note to a third party without notifying the franchisee.
Upon the execution of the Franchise Agreement by Chem Dry, the initial license fee is considered fully earned and is non-refundable. This means that even if the franchisee decides not to proceed with the franchise, the initial license fee will not be returned. This is a common practice in franchising, as the initial fee compensates the franchisor for the costs associated with granting the franchise and providing initial support.
Prospective franchisees should carefully review the Summary Page of the Franchise Agreement to understand the exact amounts of the initial license fee and the initial package fee. They should also inquire about financing options and fully understand the terms of the Business Note if they choose to finance the initial license fee. Understanding the non-refundable nature of the initial license fee is crucial before signing the agreement.