What is the 'OPENING EXTENSION FEE' for an Extreme Art Studio franchise, as described in the Franchise Agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
ee are currently due and payable on the first day of the month after signing this Franchise Agreement, and monthly thereafter within five days of the end of the calendar month.
- 3.5 OPENING EXTENSION FEE. If you fail to begin operations from your Approved Location within 12 months after signing this Franchise Agreement (or 12 months after signing the Extreme Art Rider for subsequent Extreme Art Studio Business(es)) if you agreed to operate Extreme Art Studio Business, you will pay us $1,000 per month ("Opening Extension Fee"), until either the applicable Extreme Art Studio Business is open or we terminate this Franchise Agreement. Failure to pay the Opening Extension Fee will be a non-cur
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, if a franchisee fails to open their Extreme Art Studio within 12 months of signing the Franchise Agreement (or the Extreme Art Rider for subsequent locations), they must pay an 'Opening Extension Fee.' This fee is $1,000 per month until the studio opens or the agreement is terminated.
This fee applies to each Extreme Art Studio Business operated under the agreement. The purpose of the fee is to compensate Extreme Art Studio for the delay in the franchisee becoming operational and generating revenue.
Failure to pay the Opening Extension Fee constitutes a non-curable default, which means Extreme Art Studio can immediately terminate the Franchise Agreement. The fees paid are nonrefundable, regardless of whether the studio eventually opens or the agreement is terminated. This policy underscores the importance of franchisees adhering to the opening timeline outlined in the agreement.