How does B Bops apply the development fee towards the initial franchise fee for each franchise?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
Development Fee. If you elect to purchase development rights under the multiple-unit arrangement, you must pay the Company a development fee. The amount of the development fee will vary and will be determined by multiplying $5,000 times the number of Franchises to be developed according to the development schedule. The sum of $5,000 of the development fee will be allocated towards satisfaction of the initial franchise fee payable for each Franchise established under the Development Agreement. If you establish all of the Franchises specified in the development schedule, the entire development fee will be applied towards payment of the initial franchise fees due to the Company. If you fail to comply with the development schedule (or otherwise default under the Development Agreement) and the Development Agreement is terminated, the Company will be entitled to retain that portion of the development fee that has not been applied towards payment of initial franchise fees prior to such termination. The development fee must be paid upon execution of the Development Agreement. You will receive a credit of $5,000 toward payment of such fee from the deposit paid upon execution of the Application Agreement (see below). Except as noted below, the development fee is not refundable in whole or in part under any circumstances.
Initial Franchise Fee. The initial franchise fee payable for the first Franchise established under the multiple-unit arrangement is $30,000. The Company's opening assistance for a period of between three and five days prior to the opening of the Franchise and for a period of four to six days immediately following the opening of the Franchise (other than the Company's out-ofpocket costs for airline and hotel expenses for the people provided by the Company for the opening assistance) is provided by the Company as a part of the initial franchise fee. See Item 11 for more information on opening assistance. Each additional Franchise established under the multiple-unit arrangement requires payment of an initial franchise fee of $20,000.
Source: Item 5 — INITIAL FEES (FDD pages 12–14)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, when a franchisee enters into a multiple-unit arrangement, a development fee is required. This fee is calculated by multiplying $5,000 by the number of franchises the franchisee plans to develop, according to the development schedule. For each franchise established under the Development Agreement, $5,000 of the development fee is allocated towards the initial franchise fee.
For the first franchise under a multiple-unit arrangement, the initial franchise fee is $30,000. For each additional franchise, the initial franchise fee is $20,000. The initial franchise fee is due upon execution of the franchise agreement for each location. The application of the development fee means that $5,000 of that fee will be credited towards the initial franchise fee for each location opened under the development agreement.
For example, if a franchisee agrees to open three B Bops locations, the development fee would be $15,000 (3 x $5,000). This entire $15,000 would be applied to the initial franchise fees. The franchisee would pay an initial franchise fee of $30,000 for the first location, but receive a credit of $5,000 from the development fee, effectively reducing the initial payment for that first location. The franchisee would then pay $20,000 for each of the next two locations, also receiving a $5,000 credit for each from the development fee.
It is important to note that if the franchisee fails to meet the development schedule or defaults on the Development Agreement, B Bops can retain the portion of the development fee that hasn't already been applied to initial franchise fees. The development fee is generally non-refundable, so franchisees should carefully consider their ability to meet the development schedule before entering into a multiple-unit agreement.