When is the payment of development and initial fees deferred for California Fitstop franchisees who sign a development agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the collection of initial fees from California franchisees is deferred until Fitstop has completed all pre-opening obligations and the franchisee is open for business. For California franchisees who sign a development agreement with Fitstop, the payment of the development and initial fees attributable to a specific unit in the development schedule is deferred until that specific unit is open.
This deferral is due to a determination by the Department that Fitstop has not demonstrated adequate capitalization and/or must rely on franchise fees to fund its operations. This condition imposed by the Commissioner aims to protect California franchisees by ensuring that they do not pay initial fees until Fitstop has fulfilled its pre-opening responsibilities and the franchise unit is operational.
For prospective Fitstop franchisees in California considering a development agreement, this deferral provides a significant financial benefit. It allows them to delay the payment of development and initial fees until each unit in their development schedule is ready to open, reducing the upfront financial burden and risk associated with opening multiple locations.