When is the Initial Development Fee considered fully earned by Angry Chickz?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
eloper) and Company which is then in full force and effect, and (b) Company or its Affiliates may thereafter itself exercise all of its rights, including the right to construct, equip, open, own or operate, franchise, and license others to (or grant development rights to) construct, equip, open, own or operate Restaurants at any location(s) (within or outside of the Development Area), without any restriction, subject only to any territorial rights granted for any then-existing Restaurants pursuant to a validly subsisting Franchise Agreement executed for such Restaurant.
ARTICLE 5 PAYMENTS BY DEVELOPER
- 5.1 Initial Development Fee. Concurrently with the execution of this Agreement, Developer shall pay to Company, by certified check or wir
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, the Initial Development Fee is considered fully earned upon the execution of the Area Development Agreement. Specifically, the FDD states that the Initial Development Fee is nonrefundable and not contingent on the opening or operation of any restaurant. This fee represents one-half of the total Initial Franchise Fees payable for all restaurants to be developed under the agreement, excluding the first restaurant, plus $50,000 for the initial franchise fee for the first Franchise Agreement.
This means that once the Area Development Agreement is signed and the Initial Development Fee is paid, Angry Chickz has earned the fee, regardless of whether the franchisee successfully opens or operates any restaurants. The franchisee will not be entitled to a refund of this fee under any circumstances, according to the agreement. This is a standard practice in franchising, as the initial fee compensates the franchisor for the initial services and rights granted to the franchisee.
However, it's important to note that in certain states like Illinois and Virginia, there are addenda to the franchise agreement that defer the payment of initial fees until Angry Chickz has satisfied its pre-opening obligations and the first Angry Chickz business opens to the public. This deferral is often due to regulatory requirements or the franchisor's financial condition, as indicated in the Illinois addendum. Therefore, the timing of when the fee is considered fully earned may vary depending on the specific state regulations and any addenda to the franchise agreement.