What happens if a prospective Dryject franchisee fails to pay the initial franchise fee?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon our signing the Franchise Agreement, you must pay to us an Initial Franchise Fee of $29,500. The Initial Franchise Fee is fully earned and non-refundable in consideration of administrative and other expenses incurred by us in entering into the Agreement and for our lost or deferred opportunity to enter into the Agreement with others. There is no financing available from us for the payment of the Initial Franchise Fee. The Initial Franchise Fee is uniform to all franchise owners.
Item 5, "Initial Fee" shall be amended by the addition of the following paragraph:
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.
- Item 5 "Initial Fee" is amended by the addition of the following paragraph:
"All initial fees and payments shall be deferred until such time as the franchisor has fulfilled its initial pre-opening obligations and the franchise is open for business."
"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 5 — INITIAL FEES (FDD page 13)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the standard Initial Franchise Fee is $29,500, due upon signing the Franchise Agreement. However, the consequences of failing to pay this fee are not explicitly detailed in the general sections of the FDD.
For franchisees in Maryland and Minnesota, there are specific addenda that defer the payment of initial fees. The Maryland Securities Commissioner requires that all initial fees and payments be deferred until Dryject completes its pre-opening obligations. Similarly, in Minnesota, all initial fees and payments are deferred until Dryject has fulfilled its initial pre-opening obligations and the franchise is open for business.
An addendum to the franchise agreement states that if a franchisee does not commence operating the franchised business within the specified time, the agreement is terminated, and Dryject may keep the Initial Franchise Fee to cover lost opportunity costs and expenses. This suggests that non-payment leading to a failure to commence operations could result in the loss of the initial fee.
Prospective franchisees should inquire with Dryject about the specific procedures and consequences related to non-payment of the initial franchise fee in their specific state, as policies may vary based on local regulations and individual circumstances. It is important to understand the conditions under which the fee is considered earned and non-refundable, and what recourse Dryject has in the event of non-payment.