What preopening obligations must Zoomin Groomin satisfy before the initial franchise fee is due?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
ducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. Any statements or representations signed by a franchisee purporting to understand any fact or its legal effect shall be deemed made only based upon the franchisee's understanding of the law and facts as of the time of the franchisee's investment decision. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
Initial Fee Deferral
Item 5 of the FDD is modified with the addition of the following language:
"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 pre-opening obligations and franchisee is open for business."
ILLINOIS ADDENDUM TO THE DISCLOSURE DOCUMENT
As to franchises governed by the Illinois Franchise Disclosure Act, if any of the terms of the Franchise Disclosure Document or Franchise Agreement are inconsistent with the terms below, the terms below control.
- A. Illinois law governs the Franchise Agreement.
- B. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
- C. The conditions under which your Franchise Agreement can be terminated and your rights upon nonrenewal may be affected by Sections 19 and 20 of the Illinois Franchise Disclosure Act.
- D. In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation, or provision of the Franchise Agreement purporting to bind you to waive compliance with any provision of the Illinois Franchise Disclosure Act or any other law of the State of Illinois is void.
- E.
Source: Item 17 — g. of the Disclosure Document is modified to state that, in addition to the grounds for immediate termination specified in Item 17.h., the franchisor can terminate upon written notice and a 60 day opportunity to cure for a breach of the Franchise Agreement. (FDD pages 51–65)
What This Means (2025 FDD)
According to the 2025 Zoomin Groomin FDD, the collection of the initial franchise fee is deferred in several states until Zoomin Groomin has completed its pre-opening obligations under the Franchise Agreement. This deferral is mandated by regulatory bodies in certain states due to the franchisor's financial condition or general franchise laws.
Specifically, in California, the Department of Financial Protection and Innovation requires Zoomin Groomin to complete all pre-opening obligations and ensure the franchisee is open for business before collecting any initial fees. Similarly, in Maryland, the Maryland Securities Commissioner requires a financial assurance, mandating that all initial fees and payments from franchisees be deferred until Zoomin Groomin completes its pre-opening obligations. In Minnesota, the Minnesota Department of Commerce also requires the deferral of the initial franchise fee until the franchisee has opened their Zoomin Groomin business.
In Illinois, payment of the initial franchise fee is deferred until Zoomin Groomin has satisfied its preopening obligations to the franchisee and the franchisee has commenced doing business. The Illinois Attorney General's Office imposed this deferral requirement due to Zoomin Groomin's financial condition. North Dakota also requires Zoomin Groomin to defer collection of the Initial Fee until the Franchisor has completed all of their initial obligations owed to North Dakota Franchisees under the Franchise Agreement or other documents and the Franchisee has commenced doing business pursuant to the Franchise Agreement. Virginia also mandates deferral of the initial franchise fee and other initial payments until Zoomin Groomin has completed its pre-opening obligations under the franchise agreement.
This deferral of the initial franchise fee provides a significant benefit to prospective Zoomin Groomin franchisees in these states. It ensures that Zoomin Groomin fulfills its obligations to support the franchisee in setting up the business before receiving the initial fee. This arrangement reduces the financial risk for the franchisee, as they are not required to pay the fee until the business is ready to open. Prospective franchisees should carefully review the specific pre-opening obligations outlined in the Franchise Agreement to understand what Zoomin Groomin must complete before the initial fee becomes due.