Under what circumstances is the initial franchise fee for Crawlspace Medic refundable?
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 associated with a Multi-Unit Development Agreement is not refundable under any circumstances. This fee is considered fully earned by Crawlspace Medic at the time the agreement is signed.
Specifically, the document states that the developer must pay the full amount of the Development Fee upon execution of the Multi-Unit Development Agreement. This upfront payment secures the developer's rights to establish multiple Crawlspace Medic outlets within a defined territory according to an agreed-upon schedule.
However, the Development Fee provides a credit towards the initial franchise fees for each Crawlspace Medic outlet opened under the development agreement. As each additional Franchise Agreement is executed, the developer receives a corresponding credit from the Development Fee, which is then applied to the full amount of the Initial Franchise Fee payable for each additional franchise. This means while the initial Development Fee is non-refundable, its value is directly applied to offset the franchise fees for each unit as it opens.
Prospective Crawlspace Medic multi-unit developers should carefully consider this non-refundable aspect of the Development Fee. It is essential to have a solid plan and financial resources in place before signing the Multi-Unit Development Agreement, as the fee is forfeited regardless of whether all planned locations are eventually opened.