In Hawaii, when can Punch King Fitness collect initial fees from franchisees?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
HAWAII ADDENDUM TO FRANCHISE AGREEMENT
The Franchise Agreement to which this addendum is attached is amended as follows to comply with the Hawaii Franchise Investment Law:
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- The Hawaii Department of Commerce and Consumer Affairs Business Registration Division requires that the franchisor defer the collection of all initial fees from Hawaii franchisees until the franchisor has completed all its pre-opening obligations and franchisee is open for business.
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- In recognition of the requirements of the Hawaii Franchise Investment Law, Hawaii Revised Statutes, Title 26, Chapter 482E et seq., the Franchise Agreement is amended as follows: The Hawaii Franchise Investment Law provides rights to you concerning non-renewal, termination, and transfer of the Franchise Agreement. If the Franchise Agreement contains a provision that is inconsistent with the Hawaii Franchise Investment Law, the Hawaii Franchise Investment Law will control it.
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- Each provision of this Addendum is effective only to the extent that the jurisdictional requirements of the Hawaii Franchise Investment Law are met independently of this addendum. To the extent, this addendum is inconsistent with any term or condition of the Franchise Agreement or its exhibits or attachments, the terms of this Addendum control. Franchisor and Franchisee hereby ratify and affirm the Franchise Agreement in all other respects.
The parties are signing this addendum concurrently with the Franchise Agreement to which it is attached.
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 franchisees in Hawaii is deferred until specific conditions are met. The Hawaii Addendum to the Franchise Agreement states that Punch King Fitness must complete all pre-opening obligations before collecting any initial fees. Furthermore, the franchisee must be open for business before these fees can be collected. This requirement is mandated by the Hawaii Department of Commerce and Consumer Affairs Business Registration Division.
This deferral of initial fees provides a significant benefit to prospective Punch King Fitness franchisees in Hawaii. It ensures that franchisees are not required to pay these fees until Punch King Fitness has fulfilled its obligations in preparing the franchisee to open their business. This arrangement reduces the financial risk for the franchisee during the initial stages of the franchise agreement.
It is important for potential franchisees in Hawaii to carefully review the Hawaii Addendum in conjunction with the Franchise Agreement to fully understand their rights and obligations under Hawaii law. This ensures compliance with the Hawaii Franchise Investment Law, which takes precedence over any conflicting provisions in the standard Franchise Agreement. Franchisees should also confirm with Punch King Fitness what constitutes the completion of pre-opening obligations to avoid any misunderstandings.