Under what circumstances is the Management Fee payable for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
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| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Successor Franchise Fee | 10% of our then-current Initial Franchise Fee per Extreme Art Studio Business | At the time you sign the successor franchise agreement or applicable Extreme Art Rider | This fee is commonly referred to as a "renewal fee." Payable if you qualify for a successor Franchise and choose to enter into a successor franchise agreement or applicable Extreme Art Rider. If we are not offering Franchises at the time of your renewal, the successor franchise fee will be 10% of the initial franchise fee listed in the most recent Franchise Disclosure Document. |
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, a Management Fee is payable under specific circumstances where Extreme Art Studio steps in to manage the franchisee's business. This fee is triggered if the franchisee breaches the Franchise Agreement or any Extreme Art Rider, or in the event of the franchisee's disability or death.
The Management Fee is set at $500 per day, per representative, in addition to covering any costs and expenses incurred by Extreme Art Studio while managing the business. This fee structure highlights the potential financial burden a franchisee may face if they are unable to manage their Extreme Art Studio business due to a breach, disability, or death, as it requires covering not only the daily rate for the management but also any associated costs.
This type of fee is not uncommon in franchising, as it protects the franchisor's brand and operational standards when a franchisee is unable to meet their obligations. Prospective Extreme Art Studio franchisees should understand these conditions and ensure they have plans in place to address potential breaches, disability, or death to avoid incurring these management fees. It is also important to clarify with Extreme Art Studio what specific actions or inactions would constitute a breach leading to the imposition of the Management Fee.