What is the purpose of the $5,000 deposit required by B Bops in the Application Agreement?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
Trade Area".
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- Applicant has deposited with Company the sum of $5,000 to cover certain expenses to be incurred by Company in: (i) reviewing Applicant's application for the Rights; (ii) reviewing prospective sites submitted by Applicant for approval; and (iii) providing such additional assistance or information as Company may in its discretion deem appropriate to enable Applicant to determine its interest in providing the Rights. For purposes of this Agreement, the deposit specified above shall be referred to as the "Deposit". Applicant agrees that the Deposit shall not bear interest and that it may be co-mingled with other Company funds.
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- Company agrees that within ninety (90) days of the effective date of this Agreement (which period may be extended by Company in its sole discretion), Company will inform Applicant in writing whether Applicant will be granted the Rights. Applicant acknowledges and understands that while Company agrees to consider Applicant for the Rights, Company shall have absolute discretion in determining whether to grant the Rights to Applicant. Applicant further acknowledges that Company's determination of whether to grant the Rights to Applicant will depend on a number of factors, including, but not limited to: (i) Applicant's character and business background; (ii) Applicant's financial resources and ability to obtain acceptable financing; (iii) location of an acceptable premises for operation of the business; (iv) negotiation of an acceptable agreement for the lease or purchase of such premises; and (v) Applicant's ability to secure all necessary permits and/or licenses for operation of the business. Applicant agrees to use Applicant's best efforts during the term of this Agreement to arrange
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financing, to select proposed sites to be submitted to Company for approval and to take such other actions as may be necessary to place Applicant in a position to purchase the Rights, if the Rights are granted by Company. Applicant acknowledges that Applicant shall be solely responsible for arranging all financing and selecting and securing sites acceptable to Company.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the $5,000 deposit is collected to cover expenses incurred by B Bops during the application process. Specifically, these expenses include reviewing the applicant's submission, evaluating potential sites, and providing additional assistance or information to help the applicant decide if they want to pursue the franchise rights. This deposit does not accrue interest and may be combined with other B Bops funds.
If B Bops decides to grant the franchise rights to the applicant, the $5,000 deposit will be credited towards the initial franchise fee or the development fee, whichever is applicable. However, if B Bops decides not to grant the rights, or if either party terminates the agreement, the applicant is entitled to a refund of the deposit, minus certain expenses. These expenses include the lesser of $4,500 or the actual costs incurred by B Bops for services rendered, such as travel, lodging, out-of-pocket expenses, and a $100 per hour charge for office time spent reviewing or preparing information for the applicant.
To receive a refund, the applicant must return all confidential information to B Bops. Failure to do so will result in forfeiture of the entire deposit. This deposit arrangement is a fairly standard practice in franchising, designed to compensate the franchisor for their time and resources spent evaluating potential franchisees. However, the specific terms of refundability and expense deductions can vary significantly between franchise systems, so prospective franchisees should carefully review these provisions.