If a B Bops franchisee establishes all franchises specified in the development schedule, how is the development fee applied?
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, if a franchisee elects to purchase development rights under a multiple-unit arrangement, they must pay a development fee. This fee is calculated by multiplying $5,000 by the number of franchises to be developed according to the development schedule. If the franchisee successfully establishes all franchises as specified in the development schedule, the entire development fee will be applied towards the payment of the initial franchise fees due to B Bops. This means that the money paid upfront for the development rights essentially converts into payments for the initial franchise fees of each individual B Bops location.
For a prospective B Bops franchisee, this is a significant benefit. It means that the initial investment in development rights is not an additional cost on top of the franchise fees, but rather a pre-payment. This can make the overall investment more manageable, especially for franchisees planning to open multiple locations. It's crucial to understand the development schedule and ensure it aligns with your business plan, as failure to meet the schedule can result in B Bops retaining a portion of the development fee.
It is important to note that $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. The initial franchise fee for the first Franchise established under the multiple-unit arrangement is $30,000. Each additional Franchise established under the multiple-unit arrangement requires payment of an initial franchise fee of $20,000. Therefore, the development fee helps offset these initial franchise fees.
This arrangement is fairly common in multi-unit franchising, as it incentivizes developers to meet their commitments and expand the brand's presence. However, franchisees should carefully review the Development Agreement to understand the specific terms and conditions, including any performance requirements or termination clauses that could impact the application of the development fee.