How is the Development Fee calculated for a Baya Bar multi-unit development agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
of this Agreement and all rights granted by Franchisor under this Agreement shall expire on the date on which Developer successfully and in a timely manner has complied with all of Developer's obligations hereunder and has completed the development obligations in accordance with the Development Schedule.
4. DEVELOPMENT AND FRANCHISE FEES.
| 4.1 | Multi-Unit Development Fee. In consideration of the rights granted under this Agreement, |
|---|---|
| Developer shall pay Franchisor a development fee (the "Development Fee") in the amount | |
| of Dollars ($), calculated as one hundred percent | |
| (100%) of the initial franchise fee for the first Baya Bar outlet to be developed hereunder, | |
| plus a deposit equal to fifty percent (50%) of the reduced initial franchise fee for each | |
| additional outlet to be developed hereunder. For the first (1st) Baya Bar outlet to be |
developed, the initial franchise fee shall be Thirty-Five Thousand Dollars ($35,000.00). For the second (2nd) Baya Bar outlet to be developed, the initial franchise fee shall be Thirty Thousand Dollars ($30,000.00), and for the third and each subsequent Baya Bar outlet to be developed, the initial franchise fee shall be Twenty-Five Thousand Dollars ($25,000.00).
The Development Fee is fully earned at the time this Multi-Unit Development Agreement is signed and is not refundable under any circumstances. Developer shall pay the full amount of the Development Fee to Franchisor upon Developer's execution of this Agreement.
4.2 Application of Development Fee. Contemporaneous with the execution of this Agreement, Developer shall execute the initial Franchise Agreement for the first Baya Bar outlet to be established pursuant to the Mandatory Development Schedule. Developer shall receive a Thirty-Five Thousand Dollar ($35,000.00) credit from the Development Fee, which shall be applicable to the Initial Franchise Fee due under the initial Franchise Agreement as payment in full. Upon the execution of the second Franchise Agreement for a Baya Bar outlet to be developed hereunder, Developer shall receive a Fifteen Thousand Dollars ($15,000.00) credit from the Development Fee, which shall be applied as Fifty Percent (50%) payment of the Initial Franchise Fee payable pursuant to the second Franchise Agreement and Developer shall pay the balance of the Initial Franchise Fee owed. Upon the execution of each additional Franchise Agreement for outlets to be developed hereunder, Developer shall receive a Twelve Thousand Five Hundred Dollars ($12,500.00) credit from the Development Fee, which shall be applied as Fifty Percent (50%) payment to the Initial Franchise Fee payable pursuant to each such additional Franchise Agreement and Developer shall pay the balance of the Initial Franchise Fee owed..
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the Development Fee for a multi-unit development agreement is calculated as 100% of the initial franchise fee for the first Baya Bar outlet, plus a deposit equal to 50% of the reduced initial franchise fee for each additional outlet to be developed. The initial franchise fee for the first outlet is $35,000. The initial franchise fee is reduced to $30,000 for the second outlet, and $25,000 for the third and each subsequent outlet. Therefore, the development fee will vary depending on the number of units the developer commits to opening.
For example, if a developer commits to opening three Baya Bar locations, the development fee would be calculated as follows: $35,000 (100% of the initial franchise fee for the first outlet) + $15,000 (50% of the reduced initial franchise fee for the second outlet) + $12,500 (50% of the reduced initial franchise fee for the third outlet), totaling $62,500.
The Development Fee is fully earned by Baya Bar at the time the Multi-Unit Development Agreement is signed and is not refundable under any circumstances. The developer must pay the full Development Fee upon execution of the agreement. However, the developer receives a $35,000 credit from the Development Fee applicable to the Initial Franchise Fee due under the initial Franchise Agreement as payment in full. Upon the execution of the second Franchise Agreement, the developer receives a $15,000 credit from the Development Fee, which is applied as 50% payment of the Initial Franchise Fee. For each additional Franchise Agreement, the developer receives a $12,500 credit from the Development Fee, applied as 50% payment to the Initial Franchise Fee.