Under what conditions is a Deer Solution franchisee required to pay the Management Service fee?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
| Reporting Non-Compliance | $150 per occurrence | 14 days of invoice | Payable for failure to timely submit Royalty and Activity Reports, and other reports and financial statements as required under Franchise Agreement. |
|---|---|---|---|
| Operations Non-Compliance | $450 to $1,000 per occurrence | 14 days of invoice | Payable for failure to comply with operational standards as required and specified under Franchise Agreement, plus inspection and re- inspection costs incurred by us. |
| Payment Non-Compliance | $150 per occurrence | Payable for failure to timely pay, when due, a fee or payment due to us under the Franchise Agreement, plus interest, costs, and legal fees. | |
| Non-Compliance | Actual fees, costs, and expenses | On demand | Fees, costs, and expenses incurred by us as a result of your breach or non- compliance with the terms of your Franchise Agreement. |
| Legal Fees and Expenses | Costs and expenses | As incurred | This fee includes, but is not limited to, attorneys’ fees for any failure to pay amounts when due or failure to comply in any way with the Franchise Agreement. |
| Audit | Cost of audit | On demand | For costs incurred by us for each financial audit, provided the audit determines underreporting of 2% or greater during any designated audit period. Includes fees incurred by us including audit, legal, travel and reasonable accommodations. |
| Quality Assurance Audit | Actual costs incurred by us | As invoiced | Payable if we engage a third party to perform periodic quality assurance audits, including mystery shopper programs. |
| Management Service | 20% of Gross Sales, plus expenses | As invoiced | Payable if we elect to manage the Franchised Business due to death, disability, a failure by you to have the Franchised Business managed by an authorized Managing Owner or Manager, etc. |
Source: Item 6 — OTHER FEES (FDD pages 14–19)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, a franchisee may be required to pay a Management Service fee under specific circumstances. This fee, set at 20% of Gross Sales plus expenses, becomes payable if Deer Solution elects to manage the franchised business. This election can occur due to events such as the franchisee's death, disability, or failure to ensure the business is managed by an authorized Managing Owner or Manager. The fee is invoiced to the franchisee when applicable.
This condition is important for prospective Deer Solution franchisees to understand, as it highlights situations where the franchisor may step in to manage the business. The franchisee should consider the potential impact of such events on their business and financial obligations. The Management Service fee could significantly affect the profitability of the franchise during the period Deer Solution manages the business.
Franchisors in general often have provisions allowing them to take over operations in certain crisis situations to protect the brand and ensure continuity. However, the specific triggers and the associated fees can vary widely. It is crucial for a prospective franchisee to fully understand these conditions and how they might affect their investment and operational control.
Therefore, a prospective Deer Solution franchisee should carefully evaluate the circumstances under which this fee may be applied and factor it into their financial planning and risk assessment. Understanding the conditions and potential costs associated with the Management Service fee is essential for making an informed decision about investing in a Deer Solution franchise.