What fees are required under the Bananas Smoothies Frozen Yogurt Area Development Agreement?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
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Area Development Agreement
We may, but are not required to, enter into an Area Development Agreement with you which provides for the non-exclusive right to develop a specified number of franchised units within a defined geographic area (the "Development Area") over a specified term. An Area Development Fee for the Development Area is required, as well as Initial Franchise Fees for each franchised unit developed. You must enter into the then-current Franchise Agreement for each franchised unit established under the Area Development Agreement. You are not entitled to additional development rights beyond those specified in the Area Development Agreement. You are responsible for submitting a complete site report for each franchised unit. Each site is subject to our approval which will not be unreasonably withheld. We also have the right to refuse to grant a franchise for proposed franchised unit if you do not meet financial criteria established by us.
Area Development Agreement: Minimum Development Quota
Your Area Development Agreement will contain a Minimum Development Quota specifying a series of Development Periods, the number of franchised units you must open during each Development Period and the cumulative number of franchised units you must have opened through the end of the Development Period in question. Franchised units will not count towards meeting the Minimum Development Quota for any Development Period until they have been fully constructed, developed and have opened operations in accordance with their respective franchise agreements with us. We determine if any franchised unit has "opened" for purposes of meeting the Development Schedule and any Minimum Development Quota for any Development Period. If a franchised unit is permanently closed after having been opened, you must develop and open a substitute franchised unit within one year from the date of its permanent closing separate and apart from the Development Schedule.
Source: Item 12 — TERRITORY (FDD pages 43–46)
What This Means (2025 FDD)
According to the 2025 Bananas Smoothies Frozen Yogurt Franchise Disclosure Document, if a franchisee enters into an Area Development Agreement, they are required to pay an Area Development Fee for the Development Area. In addition to this, the franchisee must also pay Initial Franchise Fees for each franchised unit that they develop under the Area Development Agreement.
These fees are standard in area development agreements within the franchise industry. The Area Development Fee typically compensates the franchisor for granting the developer the exclusive right to expand the brand within a specific territory. The Initial Franchise Fees are standard, as they represent the payment for each individual Bananas Smoothies Frozen Yogurt franchise that the developer opens.
It is important for prospective Bananas Smoothies Frozen Yogurt franchisees to understand that the Area Development Agreement specifies a Minimum Development Quota. If the franchisee fails to meet this quota, Bananas Smoothies Frozen Yogurt has the right to terminate the agreement, grant an extension with a non-refundable extension fee, or reduce the Development Area and Schedule. The extension fee is equal to the balance of the Franchise Fees for the number of franchised units that are to be opened under the Development Schedule but are not yet under construction and are behind the required timetable of the Development Schedule.