What pre-opening obligations must Spray Net satisfy before the initial franchise fees are due?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
- Enforcement of Agreement: Franchise Agreements that require the franchisee to pay all costs and expenses incurred by the franchisor in enforcing the agreement. The prevailing party in any enforcement action is entitled to recover all costs and expenses including attorney's fees.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Based upon the franchisor's financial condition, the North Dakota Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.
**SPRAY-NET INC.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the payment of initial franchise fees is contingent upon Spray Net completing its pre-opening obligations. Specifically, addenda for Maryland, Minnesota, and Virginia state that initial fees and payments owed by franchisees are deferred until Spray Net has fulfilled these pre-opening obligations. This requirement is due to financial assurance requirements mandated by the state securities commissioners in Maryland and North Dakota, and the Department of Commerce in Minnesota.
This means that a prospective Spray Net franchisee in these states will not be required to pay the initial franchise fee until Spray Net has met all of its obligations to help the franchisee get their business ready to open. These obligations could include site selection assistance, providing training, and supplying initial equipment and marketing materials. The deferral of fees protects the franchisee, ensuring that Spray Net provides the agreed-upon support before receiving payment.
It is important for potential franchisees to understand exactly what constitutes Spray Net's pre-opening obligations as defined in the franchise agreement. This ensures clarity on what Spray Net must deliver before the franchisee is required to pay the initial fees. Prospective franchisees should carefully review the franchise agreement and any state-specific addenda to fully understand these obligations and their rights regarding the payment of initial fees.