What fee deferral condition has the Commissioner imposed on Chocolate Bash?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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- The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the Commissioner has imposed a fee deferral condition due to the franchisor not demonstrating adequate capitalization or because they rely on franchise fees to fund operations. This condition mandates that Chocolate Bash must defer collecting initial franchise fees from California franchisees.
For franchisees in California, this means they will not be required to pay the initial franchise fee until Chocolate Bash has fulfilled all of its pre-opening obligations, and the franchisee's Chocolate Bash location is open for business. This deferral provides a significant benefit to new franchisees as it reduces their upfront financial burden.
Furthermore, for California franchisees who sign a development agreement, the payment of development and initial fees attributable to each specific unit in their development schedule is also deferred. These fees are deferred until the specific unit is open. This condition helps to alleviate some of the initial financial strain for franchisees in California, ensuring that they only pay the fees once the business is operational and generating revenue.