What is the effect of the Minnesota Rider on the Dryject Franchise Agreement's provisions regarding initial fees?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- Deferral of Initial Fees. Sections 7(a) and 7(b) of the Franchise Agreement is amended by adding the following: All initial franchise fees shall be deferred until such time as the franchisee is open for business.
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- Commencement of Operations. Section 3 of the Agreement is amended by deleting the last sentence in its entirety and replacing it with the following:
"In the event Franchise Owner does not commence operating the Franchised Business within the time period set forth herein, this Agreement shall be deemed terminated, and the Initial Franchise Fee may be kept by the Company to reimburse itself for lost opportunity costs, costs and/or expenses."
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the Minnesota Rider specifically addresses the initial fees outlined in the franchise agreement. The rider amends Sections 7(a) and 7(b) of the agreement to state that all initial franchise fees will be deferred. This deferral lasts until the franchisee is open for business. This means a prospective Dryject franchisee in Minnesota will not be required to pay the initial franchise fee until their Dryject franchise location is operational.
Additionally, the Minnesota Rider modifies Section 3 of the Dryject Franchise Agreement, which concerns the commencement of operations. It states that if the franchisee does not begin operating the franchised business within the stipulated timeframe, the agreement can be terminated. In such a case, Dryject may retain the initial franchise fee. This serves as compensation to Dryject for lost opportunity costs and any expenses incurred.
In summary, the Minnesota Rider provides a financial benefit to new Dryject franchisees by deferring the initial franchise fee payment until the business is up and running. However, it also protects Dryject's interests by allowing them to keep the initial fee if the franchisee fails to commence operations as agreed. This arrangement balances the financial needs of the franchisee with the operational requirements of the franchisor, which is a fairly common practice in franchising to reduce the upfront financial burden on new franchisees.