In California, when does Punch King Fitness collect initial fees from franchisees?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
CALIFORNIA STATE ADDENDUM DISCLOSURES:
- 1. The Department of Financial Protection and Innovation requires that the franchisor defer the collection of all initial fees from California franchisees until the franchisor has completed all its preopening obligations and franchisee is open for business.
For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit is deferred until that unit is open.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the collection of initial fees from California franchisees is deferred. Punch King Fitness will not collect these fees until it has completed all its pre-opening obligations and the franchisee is open for business. This arrangement is mandated by the California Department of Financial Protection and Innovation.
For franchisees in California who sign a development agreement with Punch King Fitness, the payment of development and initial fees attributable to a specific unit is also deferred. These fees are not due until that specific unit is open for business. This deferral applies to both the development fee and the initial franchise fee for each unit under the development agreement.
This policy is specific to California due to state regulations. Prospective franchisees in California benefit from this arrangement as it reduces their upfront financial burden. They are not required to pay the initial franchise fee until Punch King Fitness has fulfilled its pre-opening obligations and their franchise location is operational, which can help with cash flow during the initial setup phase.