What is the purpose of the Crawlspace Medic Development Fee?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
which Developer successfully and in a timely manner has complied with all of Developer's obligations hereunder and has completed the development obligations in accordance with the Development Schedule.
4 DEVELOPMENT AND FRANCHISE FEES.
4.1 Multi-Unit Development Fee. In consideration of the rights 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.
Source: Item 5 — INITIAL FEES (FDD pages 9–10)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, the Development Fee is paid by a developer in consideration for the rights granted under a Multi-Unit Development Agreement. This agreement allows the developer the rights to open multiple Crawlspace Medic outlets within a specific territory. The exact amount of the Development Fee for three or more locations is determined on a case-by-case basis, depending on the territory size and potential.
The Development Fee is fully earned by Crawlspace Medic at the time the Multi-Unit Development Agreement is signed. This fee is non-refundable under any circumstances, and the developer must pay the full amount upon execution of the agreement. Contemporaneously with the execution of the Multi-Unit Development Agreement, the developer must also execute the initial Franchise Agreement for the first Crawlspace Medic outlet to be established.
Importantly, the developer receives a credit from the Development Fee that can be applied to the Initial Franchise Fee due under the initial Franchise Agreement. This credit applies to each additional Franchise Agreement executed for outlets to be developed under the agreement. This means that a portion of the Development Fee essentially pre-pays the initial franchise fees for subsequent locations, reducing the upfront costs for each new Crawlspace Medic outlet opened under the development agreement.