Does the deposit for a Creative World School franchise agreement earn interest?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
gnated by us (the "Territory"). To determine whether to grant you a Franchise, we must evaluate your credentials and determine the feasibility of adding School(s) in the Territory. We incur various expenses in making those evaluations and determinations.
Accordingly, the parties agree as follows:
OPERATIVE TERMS
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- Deposit: Contemporaneously with signing this Agreement, you have deposited $5,000 (the "Deposit") with us. If we grant a Franchise to you, this Deposit will be credited toward the initial franchise fee payable in accordance with the Franchise Agreement. The Deposit will not bear interest. We will not establish a separate account for the Deposit. You recognize that we incur significant expenses in evaluating your qualifications and evaluating sites for a School. Once you and we have approved a site for a School that we have determined can be acquired on reasonably acceptable terms by lease or purchase, then the Deposit is not refundable under any circumstances. We will only refund a portion of the Deposit to you if: (a) you and we both do not sign a Franchise Agreement; and (b) we have not approved a proposed site for a School within 180 d
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to the 2025 Creative World School Franchise Disclosure Document, the $5,000 deposit required when signing the franchise agreement does not accrue interest. This deposit is credited towards the initial franchise fee if Creative World School grants the franchise. The franchisor will not put the deposit into a separate account.
This means that prospective franchisees should not expect to earn any return on the deposit amount while it is held by Creative World School. This is a fairly common practice in franchising, as the deposit is often used to cover the franchisor's expenses in evaluating the applicant and potential sites.
The deposit's refundability is contingent upon specific conditions. It becomes non-refundable once Creative World School approves a site that can be acquired on reasonably acceptable terms. A refund, less certain expenses, is only issued if a Franchise Agreement is not signed and a site is not approved within 180 days of signing the initial agreement. The deduction from the deposit will be the greater of $3,500 or the franchisor's out-of-pocket expenses.