What agreement must a Crawlspace Medic franchisee sign to trigger the development fee?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
For three locations (or more), the development fee shall be determined on a case by case basis depending upon the territory size and potential.
The Development Fee is fully earned at the time this Multi-Unit Development Agreement is signed and is not refundable under any circumstances. Developer shall pay the full amount of the Development Fee to Franchisor upon Developer's execution of this Agreement.
4.2 Application of Development Fee. Contemporaneous with the execution of this Agreement, Developer shall execute the initial Franchise Agreement for the first Crawlspace Medic outlet to be established pursuant to the Mandatory Development Schedule. Developer shall receive a corresponding credit from the Development Fee, which shall be applicable to the Initial Franchise Fee due under the initial Franchise Agreement. Upon the execution of each of additional Franchise Agreement for outlets to be developed hereunder, Developer shall receive a corresponding credit from the Development Fee, which shall be applicable to the full amount of the Initial Franchise Fee payable pursuant to each such additional Franchise Agreement. Upon Franchisor's approval, Developer may enter into the initial Franchise Agreement or any subsequent Franchise Agreement as required under this Agreement using a newly formed entity, such as a limited liability company, corporation or partnership, for the sole purpose of entering into a Franchise Agreement and operating the Crawlspace Medic outlet pursuant thereto, provided that Developer shall also personally sign such Franchise Agreement as a principal.
Source: Item 5 — INITIAL FEES (FDD pages 9–10)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, the Development Fee is triggered when the Multi-Unit Development Agreement is signed. This fee is fully earned at signing and is non-refundable under any circumstances. The franchisee (referred to as the Developer in the FDD) must pay the full Development Fee upon execution of this agreement.
Simultaneous with signing the Multi-Unit Development Agreement, the Developer also executes the initial Franchise Agreement for their first Crawlspace Medic location. The Development Fee provides a credit that can be applied to the Initial Franchise Fee due under this initial Franchise Agreement. Similarly, upon executing additional Franchise Agreements for subsequent locations, the Developer receives corresponding credits from the Development Fee, which are then applicable to the Initial Franchise Fees for those additional franchise agreements.
This arrangement is structured to incentivize and support multi-unit development. By paying the Development Fee upfront, the franchisee secures the rights to develop multiple Crawlspace Medic locations within a specified area. The credits against future franchise fees effectively spread the initial investment over time as each new location is established. However, it's crucial to recognize that the Development Fee is non-refundable, meaning that if the franchisee fails to open all the agreed-upon locations, they will not receive a refund for the unused portion of the fee.