Why is the deferral of the initial franchise fee required for Floyds 99 franchisees in Illinois?

According to the 2025 Floyds 99 Franchise Disclosure Document addendum for Illinois, the deferral of the development fee and initial franchise fee is mandated by the Illinois Attorney General's Office. This requirement is based on Floyds 99's financial statements, which apparently raised concerns about the company's ability to provide adequate services and support to its franchisees. This is explicitly noted as a risk factor on the state cover page of the FDD.

For a prospective franchisee in Illinois, this deferral means they won't have to pay the development fee and initial franchise fee upfront. Instead, these fees are deferred until Floyds 99 has fulfilled its initial obligations and the franchisee's shop is open for business. This arrangement reduces the initial financial burden on the franchisee and provides some assurance that they will only pay these fees once the business is operational.

However, the FDD also states that Floyds 99 reserves the right to require franchisees to pay up to $25,000 for an opening advertising and marketing campaign for their first shop and each subsequent shop they establish. While the initial franchise fee is deferred, franchisees should still be prepared for this potential marketing expense. Additionally, the risk factor regarding Floyds 99's financial condition should be carefully considered, as it could impact the level of support and services they can provide throughout the franchise term.

It is important for potential franchisees to carefully review Floyds 99's financial statements (Item 21) and seek professional advice to fully understand the implications of the franchisor's financial condition. They should also clarify with Floyds 99 what specific obligations must be met before the deferred fees become due and what recourse they have if Floyds 99 fails to provide adequate support.