To whom is the initial franchise fee paid for a Clozetivity franchise?
Clozetivity Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of E | Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|
| Initial Franchise Fee | $39,000 | Lump sum | When Franchise | Us |
| (Note 1) | Agreement is signed |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–24)
What This Means (2024 FDD)
According to Clozetivity's 2024 Franchise Disclosure Document, the initial franchise fee is paid to the franchisor, referred to as "Us" in the document. For a single territory, the initial franchise fee is $39,000, while for a double territory, it is $78,000. This fee is due in a lump sum when the Franchise Agreement is signed.
This means that a prospective Clozetivity franchisee must be prepared to pay this substantial fee upfront to secure the rights to operate a franchise. The initial franchise fee is non-refundable and covers Clozetivity's costs associated with granting the franchise, including training and support. It's important for potential franchisees to factor this cost into their initial investment and ensure they have sufficient capital available.
It is typical in the franchise industry for the initial franchise fee to be paid directly to the franchisor. This fee provides the franchisee with the right to use the Clozetivity brand, system, and intellectual property. Franchisees should carefully review the Franchise Agreement to understand the terms and conditions related to the initial franchise fee, including any circumstances under which it may be refundable or transferable.