Is the deposit for a Creative World School franchise agreement refundable?
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 Creative World School's 2025 Franchise Disclosure Document, a $5,000 deposit is required when signing the franchise agreement. This deposit will be credited towards the initial franchise fee if Creative World School grants the franchise. The deposit does not accrue interest, and Creative World School will not place it in a separate account.
The deposit's refundability depends on specific conditions. Once Creative World School and the franchisee approve a site that can be acquired on reasonably acceptable terms, the deposit becomes non-refundable under any circumstances. However, a portion of the deposit may be refundable if a franchise agreement is not signed by both parties and Creative World School has not approved a site within 180 days of signing the agreement.
In the event that a refund is applicable, Creative World School will deduct the greater of $3,500 or their out-of-pocket expenses from the $5,000 deposit. These expenses may include charges from their architect for preliminary site plans. This means that the franchisee may not receive the full deposit back, and in some cases, may receive very little depending on the expenses incurred by Creative World School during the site evaluation process.