In what form is the Crawlspace Medic Development Fee paid?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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 Crawlspace Medic's 2024 Franchise Disclosure Document, the Development Fee is paid in full to the Franchisor upon the Developer's execution of the Multi-Unit Development Agreement. This fee is deemed fully earned at the time the agreement is signed and is explicitly non-refundable under any circumstances.
For prospective Crawlspace Medic developers, this means that the full Development Fee must be paid upfront when signing the agreement, which commits them to developing multiple Crawlspace Medic outlets. This represents a significant initial investment and financial commitment. The non-refundable nature of the fee underscores the importance of thoroughly evaluating the market potential and personal capabilities before entering into a multi-unit development agreement with Crawlspace Medic.
However, the agreement provides a mechanism for the Development Fee to be applied. Contemporaneously with the execution of the Development Agreement, the developer will execute the initial Franchise Agreement for the first Crawlspace Medic outlet. The developer will receive a credit from the Development Fee, which shall be applicable to the Initial Franchise Fee due under the initial Franchise Agreement. This credit mechanism is applied to each additional Franchise Agreement executed for subsequent outlets, effectively using the Development Fee to offset the Initial Franchise Fees for each location. This structure is common in multi-unit franchise agreements, allowing the franchisor to secure commitment while providing a practical application of the development fee towards opening costs.