For a single-unit franchise agreement with Jersey Mikes, when is the initial franchise fee payable?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.3 Franchisee shall pay to Franchisor the initial fee described on the Summar y Pages upon execution of the Agreement. Said fee shall be deemed fully earned and non-refundable upon execution of this Agreement as consideration for expenses incurred by Franchisor in furnishing assistance and services to Franchisee and for Franchisor's lost or deferred opportunity to franchise others, except as may be specifically provided in this Agreement or any Exhibit attached to this Agreement.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, the initial franchise fee is due upon the execution of the Franchise Agreement. The FDD specifies that this fee is considered fully earned and non-refundable once the agreement is executed. This payment compensates Jersey Mike's for the expenses they incur while providing assistance and services to the franchisee, as well as for the opportunity cost of not franchising to someone else.
This means that a prospective Jersey Mike's franchisee must be prepared to pay the initial franchise fee at the time they sign the agreement. It is important to understand that this fee is non-refundable, regardless of whether the franchisee ever opens their Jersey Mike's location. This is a common practice in the franchise industry, as the franchisor incurs costs from the moment the agreement is signed.
Therefore, before signing the Franchise Agreement, a potential franchisee should carefully review all aspects of the agreement and conduct thorough due diligence. This includes understanding the total investment required, the ongoing fees, and the terms of the agreement. Given that the initial fee is non-refundable, it is crucial to be certain about your decision before executing the agreement with Jersey Mike's.