What is the estimated range for the Bang Cookies Development Area Fee?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Expenditure | Amount | Method of Payment | When Due |
|---|---|---|---|
| To Whom Payment is Made | |||
| Development Area Fee (Note 1) | $70,000- $140,000 | Lump sum | When Franchise Agreement and Multi- Unit Development Agreement are signed |
| Estimated Initial Investment to Open One Shop (Bakery Location) (Note 2) | $403,870– $709,020 | Estimated Initial Investment is based on estimate contained in Chart A, above, of this Item 7, for a Franchise Agreement. See, Chart A | |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 17–24)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the Development Area Fee ranges from $70,000 to $140,000. This fee is paid in a lump sum when the Franchise Agreement and Multi-Unit Development Agreement are signed.
The Development Area Fee is applicable when a franchisee enters into a Multi-Unit Development Agreement, which allows them to develop multiple Bang Cookies shops within a specific area. The fee compensates Bang Cookies for granting the franchisee the exclusive right to develop within that territory. The amount of the Development Area Fee depends on the number of additional shops the franchisee is authorized to develop beyond the initial shop covered by the Franchise Agreement.
The minimum number of shops a franchisee may be authorized to develop under a Multi-Unit Development Agreement is three, and the maximum is five. The Development Area Fee is calculated at $35,000 for each shop beyond the first shop authorized by the Franchise Agreement. Therefore, the range of $70,000 to $140,000 reflects the cost for developing two to four additional shops (2 x $35,000 = $70,000 and 4 x $35,000 = $140,000).
It's important to note that the franchisee will also be required to pay an initial franchise fee of $55,000 for the first shop when signing the Franchise Agreement. However, they will not be required to pay an additional initial franchise fee for each subsequent shop developed under the Multi-Unit Development Agreement. This structure incentivizes multi-unit development by reducing the upfront franchise fees for additional locations.