What agreement must a Crawlspace Medic franchisee sign to trigger the initial franchise fee?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
5 EXERCISE OF DEVELOPMENT RIGHTS.
5.1 Valid Exercise. Developer shall exercise the development rights granted hereunder only by entering into a separate Franchise Agreement with Franchisor for each Crawlspace Medicoutlet for which a development right is granted. Developer shall execute and deliver to Franchisor, concurrently with the execution and delivery of this Agreement, Franchisor's current form of Franchise Agreement for the first Crawlspace Medic outlet to be established by Developer pursuant to the Mandatory Development Schedule. For each subsequent Crawlspace Medic outlet to be established hereunder, Developer shall execute and deliver to Franchisor Franchisor's then-current form of Franchise Agreement, which shall be presented to Developer together with Franchisor's then-current Franchise Disclosure Document. The then-current form of Franchise Agreement may differ from the current form of Franchise Agreement; provided however, the initial franchise fee for each additional outlet shall be the applicable amount set forth in in Section 4.1 hereof.
Source: Item 5 — INITIAL FEES (FDD pages 9–10)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, the initial franchise fee is triggered by signing the Franchise Agreement. Specifically, for multi-unit developers, the Development Fee is earned upon signing the Multi-Unit Development Agreement.
For developers pursuing a multi-unit strategy, the initial Franchise Agreement for the first Crawlspace Medic outlet must be executed when the Multi-Unit Development Agreement is signed. A credit from the Development Fee will then be applied to the initial franchise fee due under this initial Franchise Agreement. For each additional Crawlspace Medic outlet, a separate Franchise Agreement must be entered into with Crawlspace Medic, and the developer will receive a credit from the Development Fee applicable to the initial franchise fee for each additional franchise agreement.
The FDD states that developers must execute and deliver Crawlspace Medic's current form of Franchise Agreement for the first outlet concurrently with the execution and delivery of the Multi-Unit Development Agreement. For subsequent outlets, the developer must execute and deliver Crawlspace Medic's then-current form of Franchise Agreement, which will be presented along with the then-current Franchise Disclosure Document. The then-current form of the Franchise Agreement may differ from the current form, but the initial franchise fee for each additional outlet will be the amount set forth in Section 4.1 of the agreement.