Under what condition are Zoomin Groomin franchisees' initial fees and payments deferred?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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- Initial Fee Deferral. The Franchise Agreement is modified to also provide: "Based upon the franchisor's financial condition, the Maryland 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."
| FRANCHISEE: | FRANCHISOR: ZOOMIN GROOMIN USA LLC D/B/A ZOOMIN GROOMIN |
|---|---|
| By: | By: |
| By: | Date: |
MINNESOTA ADDENDUM TO THE FRANCHISE AGREEMENT
- Minn. Stat. §80C.21 and Minn. Rule 2860.4400(J) prohibit the franchisor from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes. In addition, nothing in the Franchise Disclosure Document or agreements can abrogate or reduce (1) any of the franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or (2) franchisee's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
- With respect to franchises governed by Minnesota law, the franchisor will comply with Minn. Stat. Sec. 80C.14 Subds. 3, 4, and 5 which require (except in certain specified cases), that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the franchise agreement and that consent to the transfer of the franchise will not be unreasonably withheld.
- The franchisor will protect the franchisee's rights to use the trademarks, service marks, trade names, logotypes or other commercial symbols or indemnify the franchisee from any loss, costs or expenses arising out of any claim, suit or demand regarding the use of the name.
- Minnesota considers it unfair to not protect the franchisee's right to use the trademarks. Refer to Minnesota Statutes 80C.12, Subd. 1(g).
- Minnesota Rules 2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to a general release.
- The franchisee cannot consent to the franchisor obtaining injunctive relief. The franchisor may seek injunctive relief. See Minn. Rules 2860.4400J.
- Also, a court will determine if a bond is required.
- Any Limitations of Claims section must comply with Minnesota Statutes, Section 80C.17, Subd. 5.
- 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.
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 deferral of initial fees and payments depends on the state where the franchise is located. In Maryland, all initial fees and payments are deferred until Zoomin Groomin completes its pre-opening obligations under the Franchise Agreement; this deferral is based on the franchisor's financial condition and is required by the Maryland Securities Commissioner, who mandates a financial assurance. In Minnesota, the collection of the Initial Fee is deferred until the opening of the franchised business, as required by the Minnesota Department of Commerce. Similarly, in Virginia, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires the deferral of the initial franchise fee and other initial payments until Zoomin Groomin has completed its pre-opening obligations. In North Dakota, Zoomin Groomin defers collection of the Initial Fee until it has completed all initial obligations to North Dakota Franchisees and the Franchisee has commenced business. In California, the Department of Financial Protection and Innovation requires that Zoomin Groomin defer the collection of all initial fees from California franchisees until the franchisor has completed all its pre-opening obligations and the franchisee is open for business. Finally, 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; this deferral is imposed by the Illinois Attorney General's Office due to Zoomin Groomin's financial condition.
For a prospective Zoomin Groomin franchisee, this means that the upfront financial burden can vary significantly depending on the state. In states like Maryland and Illinois, the deferral is explicitly linked to Zoomin Groomin's financial condition, which might raise concerns about the company's stability. However, it also provides some financial relief to the franchisee during the initial setup phase. In other states like Minnesota, Virginia, North Dakota, and California, the deferral is mandated by state regulations to protect franchisees until Zoomin Groomin fulfills its pre-opening obligations.
This deferral of fees is a significant benefit as it reduces the initial capital required to start the franchise. However, franchisees should be aware of the specific conditions and reasons for the deferral in their state, as it may indicate underlying financial issues with the franchisor. It is also important to confirm with Zoomin Groomin that all pre-opening obligations are clearly defined and met before the initial fees become due. Prospective franchisees should consult with a franchise attorney to fully understand the implications of these deferral conditions and how they might affect their investment.