How are initial Chem Dry franchise fees recognized for individual franchises?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Upon execution of this Agreement by CDI, the Initial License Fee shall be deemed fully earned and non-refundable.
This Business Note represents the balance of the Initial Fee, Initial License Fee, or other amounts payable by Borrower to CDI under that certain Chem-Dry Franchise Agreement between Borrower, as franchisee, and CDI, as franchisor. Borrower's obligations under this Business Note are absolute, irrevocable and unconditional. No defense, claim, set off, or other cause in favor of Borrower arising under the Franchise Agreement shall affect Borrower's obligations to pay this Business Note in accordance with its terms. CDI may assign, transfer, discount or pledge this Business Note without notice to Borrower. Borrower acknowledges that its obligations under this Business Note are independent of and are not conditioned or dependent upon any rights or obligations of the parties to the Franchise Agreement.
This Business Note may be prepaid in whole or in part, without premium, from time to time on the date that any installment comes due, with minimum partial payments of $100.00 or any multiple thereof. If Borrower pays the Initial License Fee amount owed pursuant to the Franchise Agreement associated with this Business Note in full within six (6) months of the date of this Business Note, CDI will discount the total due for the Initial License Fee by ten percent (10%). No prepayments of this Business Note shall affect the obligation of Borrower to make the
payments of installments of the principal and interest required by the first paragraph hereof until this Business Note shall have been paid in full. All amounts due by Borrower to CDI shall be subject to a one-time late fee of $100.00 and bear interest after their due date at the highest applicable legal rate for open account business credit in the state of Borrower's domicile, not to exceed one and one half percent (1.5%) per month. After the maturity of this Business Note (whether by acceleration or otherwise), CDI shall have the right to collect all payments due and interest shall accrue on the principal balance at the rate of 18% per annum. A charge of $40.00 will be assessed for each installment returned unpaid (NSF, Account Closed, etc.).
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the initial license fee is deemed fully earned and non-refundable upon the execution of the Franchise Agreement by Chem Dry. This means that once the agreement is signed by Chem Dry, the franchisee is obligated to pay the full initial license fee, and this fee will not be returned under any circumstances. This is a standard practice in franchising, as the initial fee compensates the franchisor for granting the franchise rights and providing initial support.
Chem Dry may finance the Initial License Fee, in which case the franchisee will make a down payment as specified on the Summary Page of the agreement and sign a Business Note for the remaining balance. The Business Note is payable regardless of whether the agreement terminates and is not subject to any claims or defenses. Chem Dry retains the right to assign or transfer the Business Note to a third party without notifying the franchisee.
If a Chem Dry franchisee pays the Initial License Fee amount owed pursuant to the Franchise Agreement associated with this Business Note in full within six months of the date of this Business Note, Chem Dry will discount the total due for the Initial License Fee by ten percent. This provides an incentive for franchisees to pay off their initial fees quickly. All amounts due by the borrower to CDI shall be subject to a one-time late fee of $100.00 and bear interest after their due date at the highest applicable legal rate for open account business credit in the state of Borrower's domicile, not to exceed one and one half percent (1.5%) per month. After the maturity of this Business Note (whether by acceleration or otherwise), CDI shall have the right to collect all payments due and interest shall accrue on the principal balance at the rate of 18% per annum. A charge of $40.00 will be assessed for each installment returned unpaid (NSF, Account Closed, etc.).