Is the Crawlspace Medic Initial Franchise Fee earned upon payment or at a later date?
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 Crawlspace Medic's 2024 Franchise Disclosure Document, the Development Fee associated with a multi-unit development agreement is fully earned upon signing the agreement. This fee is not refundable under any circumstances, and the developer must pay the full amount to Crawlspace Medic upon execution of the agreement.
For prospective Crawlspace Medic franchisees considering a multi-unit development, this means the Development Fee is immediately earned by the franchisor when the agreement is signed. The franchisee cannot get a refund of this fee under any circumstances. This is a key consideration for franchisees planning multiple locations, as it represents an upfront, non-refundable investment.
The Development Fee can be credited towards the Initial Franchise Fees for each Crawlspace Medic outlet opened under the development agreement. This credit is applied upon the execution of each individual Franchise Agreement for the additional outlets. This arrangement allows the initial Development Fee to be used to offset the franchise fees for subsequent locations, incentivizing the developer to proceed with the development schedule.
It is important for potential Crawlspace Medic developers to fully understand the terms of the Multi-Unit Development Agreement, including the Mandatory Development Schedule and conditions for opening subsequent locations. The agreement specifies that the developer must execute additional Franchise Agreements for each outlet and adhere to a schedule, with penalties possible for delays. The franchisor may grant consideration for delays caused by natural disasters, government restrictions, or other uncontrollable acts of nature, provided the franchisee submits a written request for a time extension within 30 days prior to the deadline.