What is the definition of 'Successor Agreement Fee' in the Baya Bar franchise agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
on the date that is ten (10) years following the Opening Date, as defined in Section 8 hereof (the "Term").
- 5. SUCCESSOR OPTIONS. Subject to the terms and conditions of this Agreement, Franchisee shall have the right, following the expiration of the Term hereof, to enter into a new franchise agreement and other agreements then customarily employed by Franchisor
and in the form then generally being offered to prospective franchisees in the state in which the Territory is located (the "Successor Franchise Agreement") for two (2) additional terms of five (5) years. The term of each such Successor Franchise Agreement shall commence upon the date of expi
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a franchisee has the option to enter into a new franchise agreement upon the expiration of their initial term. This new agreement is called the "Successor Franchise Agreement," and it is based on the agreements Baya Bar typically offers to new franchisees in the state where the territory is located.
The term of each Successor Franchise Agreement is for an additional five years, and the franchisee will be charged a "Successor Agreement Fee" of $3,500 for each term. This fee allows the franchisee to continue operating under the Baya Bar brand for another five years, provided they meet the other conditions for renewal.
This fee is charged per term, meaning that if a franchisee chooses to renew for both available terms, they would pay the $3,500 fee twice, once for each five-year extension. This fee is in addition to any other costs associated with the renewal, such as potential remodeling or training expenses that Baya Bar may require.