For Clear Pest Pros franchisees in Virginia, what is the effect of the addendum on Item 21 of the FDD?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO THE FRANCHISE AGREEMENT FOR USE IN VIRGINIA
This is a Rider to the Franchise Agreement which is being executed concurrently with this rider, between Franchisor and Franchisee.
Item 5 and Item 21 are amended to state: Based upon the franchisor's financial condition, the Virginia Division of Securities and Retail Franchising has required that we defer the collection of initial fees until all initial obligations owed to franchisee under the franchise agreement or other documents have been fulfilled by the franchisor and the franchisee has commenced doing business pursuant to the franchise agreement.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to Clear Pest Pros' 2025 Franchise Disclosure Document, the addendum for use in Virginia affects Item 21 by deferring the collection of initial fees. Specifically, the Virginia Division of Securities and Retail Franchising requires Clear Pest Pros to postpone collecting initial franchise fees until all initial obligations to the franchisee have been fulfilled by Clear Pest Pros, and the franchisee has commenced business operations.
This amendment protects the franchisee by ensuring that Clear Pest Pros fulfills its initial obligations before receiving the initial franchise fees. This could include providing training, site selection assistance, or other pre-opening support as outlined in the franchise agreement. The franchisee is not obligated to pay the initial fees until these obligations are met and the business is up and running.
This type of addendum is implemented to provide additional protection to franchisees in certain states based on their franchise laws and the franchisor's financial condition. It reduces the financial risk for the franchisee during the initial stages of the business, aligning the franchisor's interests more closely with the franchisee's success. Prospective Clear Pest Pros franchisees in Virginia should carefully review the franchise agreement and the Virginia addendum to fully understand their rights and obligations regarding the payment of initial fees.