What is the consequence if a B Bops franchisee defaults under the Development Agreement?
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.
Source: Item 5 — INITIAL FEES (FDD pages 12–14)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a franchisee who enters into a multiple-unit development agreement and subsequently fails to meet the development schedule or otherwise defaults on the agreement faces specific financial consequences. The development fee, which is calculated by multiplying $5,000 by the number of franchises to be developed, is at risk.
Specifically, if the Development Agreement is terminated due to the franchisee's failure to comply with the development schedule or any other default, B Bops is entitled to retain the portion of the development fee that has not yet been applied towards the initial franchise fees for established franchises. This means that B Bops keeps the money allocated for franchises that were not opened according to the agreed-upon schedule.
For a prospective B Bops franchisee, this highlights the importance of carefully assessing their ability to meet the development schedule outlined in the Development Agreement. Failure to do so not only results in the loss of development rights but also in the forfeiture of a significant portion of the development fee, which is generally non-refundable. This could represent a substantial financial loss in addition to the lost opportunity to develop the planned franchise locations.