When is the initial franchise fee due to Crawlspace Medic?
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 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the development fee is due when the Multi-Unit Development Agreement is signed. The document specifies that the development fee is fully earned and non-refundable at the time of signing the agreement. Therefore, a prospective Crawlspace Medic developer must be prepared to pay the full development fee upon execution of the agreement.
For developers entering into a Multi-Unit Development Agreement with Crawlspace Medic, the initial franchise fee for the first Crawlspace Medic outlet is addressed through a credit from the Development Fee. This credit is applied to the initial franchise fee due under the initial Franchise Agreement. Similarly, for each additional Franchise Agreement executed for subsequent outlets, the developer receives a corresponding credit from the Development Fee, which is applicable to the full amount of the initial franchise fee payable for each additional franchise.
This arrangement benefits the developer by allowing them to offset the initial franchise fees for multiple locations with the Development Fee. However, it's crucial to understand that the Development Fee is non-refundable, regardless of whether all the planned Crawlspace Medic outlets are eventually opened. Therefore, developers should carefully consider their development plans and financial capabilities before entering into a Multi-Unit Development Agreement with Crawlspace Medic.