Under what circumstances is the initial franchise fee for a Crawlspace Medic franchise refundable?
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 22 — CONTRACTS (FDD page 42)
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 not refundable under any circumstances. This fee is fully earned by Crawlspace Medic at the time the Multi-Unit Development Agreement is signed.
This means that if a prospective Crawlspace Medic franchisee enters into an agreement to develop three or more locations, the development fee they pay upfront is non-refundable, regardless of whether they ultimately open all the planned locations. The amount of the development fee is determined on a case-by-case basis, depending on the territory size and potential.
However, the development fee is applied as a credit towards the initial franchise fees for each Crawlspace Medic outlet opened under the development agreement. So, while the initial development fee itself is non-refundable, the franchisee will receive credit for it when they execute each individual Franchise Agreement for the outlets they are developing.