Does the Crawlspace Medic franchise offering include a Multi Unit Development Agreement?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
s granted under this Agreement, Developer shall pay Franchisor a development fee (the "Development Fee") in the following amount:
| Number Develop | of | Outlets | to | Development Fee |
|---|---|---|---|---|
| 2 | $118,000 | |||
| 3 | To Be Determined |
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.
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.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the franchise offers a Multi-Unit Development Agreement. This agreement allows a developer to secure the rights to open multiple Crawlspace Medic outlets within a specific development area. However, the document explicitly states that the Development Agreement itself does not grant the developer the right to operate a Crawlspace Medic outlet or use the brand's marks; these rights are only conferred upon signing individual Franchise Agreements for each location. The developer's rights to open and operate a Crawlspace Medic outlet and use the System and Marks shall be derived only through the execution of a Franchise Agreement for each Crawlspace Medic outlet to be established in the Development Area.
The Crawlspace Medic FDD outlines specific terms and conditions related to the Multi-Unit Development Agreement. The development fee for three or more locations is determined on a case-by-case basis, depending on the territory size and potential. This fee is non-refundable and fully earned upon signing the Multi-Unit Development Agreement. The developer receives a credit from the development fee applicable to the initial franchise fee due under each individual Franchise Agreement executed under the development schedule.
The term of the Multi-Unit Development Agreement lasts until the developer has met all obligations and completed the development schedule. The FDD also specifies a mandatory development schedule, requiring the second location to open within one year of the first, with subsequent locations opening at least every year thereafter. Extensions may be granted in writing for uncontrollable events such as natural disasters or government restrictions. The transferee has executed Franchisor's then-standard form of Multi-Unit Development Agreement, which may have terms and conditions different from this Agreement, for a term no less than the unexpired term of future development obligations due pursuant to the Mandatory Development Schedule of this Agreement.