Instead of using an escrow account in Washington, what conditions must Mrcool meet before requiring or accepting initial franchise fees or development fees?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Pursuant to The Department of Financial Institutions Securities Division of the State of Washington, RCW 19.100.050 and WAC 460-80-460, all initial fees, including development fees, will be held in escrow to ensure Franchisor has fully satisfied all pre-opening obligations. In lieu of an escrow account, Franchisor will not require or accept payment of any initial franchise fees or development fees until franchisee has (a) received all initial training that it is entitled to under the franchise agreement or offering circular, and (b) is open for business. With respect to development fees, Franchisor will accept payment proportionally to each franchise outlet opened, after all pre-opening obligations have been met. Alternatively, Franchisor may choose to provide a guarantee or acquire a surety bond.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, in the state of Washington, initial fees, including development fees, are typically held in escrow to ensure Mrcool fulfills its pre-opening obligations. However, Mrcool can forgo the escrow account under certain conditions.
Instead of using an escrow account, Mrcool will not require or accept any initial franchise fees or development fees until the franchisee has completed all initial training they are entitled to under the franchise agreement or offering circular. Additionally, the franchisee must be open for business before Mrcool can accept these payments.
For development fees specifically, Mrcool will accept payment proportionally for each franchise outlet as it opens, but only after all pre-opening obligations have been met for that specific location. Mrcool also has the option to provide a guarantee or acquire a surety bond as an alternative to the escrow account. This ensures that franchisees in Washington receive the agreed-upon services and support before Mrcool receives the initial fees.