What is the 'Opening Extension Fee' for Extreme Art Studio, and when is it applied?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
Schedule for Opening
You must begin offering services from the Studio within 12 months of signing the Franchise Agreement. Factors that affect this length of time include securing any necessary financing; selecting the Studio site; negotiating the lease; obtaining necessary permits; completing leasehold improvements; delivery of equipment, inventory and supplies; completing our initial training program; and hiring and training employees, If you fail to open your Extreme Art Studio Business within 12 months of signing the Franchise Agreement or Extreme Art Rider, we may terminate your Franchise Agreement (without providing you a refund) or you will be required to pay us an "Opening Extension Fee" of $1,000 per month until you open or until the Franchise
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–37)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, if a franchisee fails to open their Extreme Art Studio Business within 12 months of signing the Franchise Agreement or Extreme Art Rider, they may be required to pay an "Opening Extension Fee." This fee is $1,000 per month.
The fee continues until the Extreme Art Studio Business opens or until the Franchise Agreement is terminated. This means a delay in opening can result in significant additional costs for the franchisee, potentially impacting their initial investment and profitability.
This type of fee is not uncommon in franchising. It is designed to incentivize franchisees to open their businesses promptly and to compensate the franchisor for the continued support and resources allocated during the pre-opening phase. Prospective Extreme Art Studio franchisees should carefully consider the factors that could affect their opening timeline, such as securing financing, site selection, lease negotiations, and obtaining permits, to avoid incurring this fee.