Under what conditions will Creative World School refund a portion of the deposit?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
(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 prospective franchisee may receive a partial refund of their deposit under specific conditions. The franchisee must not have signed a Franchise Agreement with Creative World School, and Creative World School must not have approved a proposed site for the school within 180 days of the agreement's signing. If both these conditions are met, Creative World School will refund the deposit, but will deduct the greater of $3,500 or the out-of-pocket expenses incurred while evaluating the applicant's qualifications and potential sites. These expenses may include charges from Creative World School's architect for preliminary site plans.
This policy has several implications for potential franchisees. First, the initial $5,000 deposit is at risk if a site is approved, even if a Franchise Agreement isn't ultimately signed. Second, even if a site isn't approved, a significant portion of the deposit could be used to cover Creative World School's expenses. The franchisee bears the risk of these expenses, which could include architectural fees.
It is important for prospective franchisees to understand these terms and conditions before signing the agreement and paying the deposit. They should inquire about the typical range of out-of-pocket expenses Creative World School incurs during the site evaluation process to better understand the potential financial risk. Franchisees should also actively participate in the site selection process to ensure it progresses in a timely manner and aligns with their expectations.