Under what condition are transfer fees collectable for a My Salon Suite franchise?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's revenues consist of franchise sales including initial franchise fees, franchise re-sale transfer fees, and renewal franchise fees, royalties based on a percent of franchisee sales, salon suite rental income, and other revenue including sales of equipment, services, supplies and inventory. Some franchises are master franchise arrangements with development rights across a defined territory or multiple territories. Typical agreements governing the franchise relationship range from 10 to 20 years in length, whereby the initial franchise and transfer fees are typically collected upon agreement execution and prior to the start of the Company's performance obligations.
Source: Item 17 — (r) of the FDD and Section 13 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which Franchisee must agree. The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. The FDD and the Franchise Agreement are amended accordingly to the extent required by law. (FDD pages 230–274)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, transfer fees are collected when a franchise is re-sold. The document states that My Salon Suite's revenues consist of franchise sales, including initial franchise fees, franchise re-sale transfer fees, and renewal franchise fees, among other sources of revenue. These fees are typically collected upon agreement execution and prior to the start of the company's performance obligations.
This indicates that if a franchisee decides to sell their existing My Salon Suite franchise to a new owner, a transfer fee is generated. This fee contributes to My Salon Suite's overall revenue stream. The collection of this fee occurs at the time the transfer agreement is finalized, before My Salon Suite begins to provide support or services to the new franchisee.
Prospective franchisees should be aware of this fee, as it will be a factor if they decide to sell their franchise in the future. Understanding the amount of the transfer fee and the conditions under which it is collected is crucial for financial planning and decision-making related to the potential sale of a My Salon Suite franchise.