When is the Baya Bar development fee considered fully earned?

According to Baya Bar's 2024 Franchise Disclosure Document, the development fee is considered fully earned at the time the Multi-Unit Development Agreement is signed. This fee is non-refundable under any circumstances. The developer is required to pay the full amount of the Development Fee to Baya Bar upon the developer's execution of the agreement.

For a multi-unit development agreement, the development fee is calculated as 100% of the initial franchise fee for the first shop, plus 50% of the reduced initial franchise fee for each additional shop the developer commits to. For example, if a developer commits to three shops, the development fee is calculated as $35,000 for the first shop, plus 50% of $30,000 ($15,000) for the second shop, plus 50% of $25,000 ($12,500) for the third shop, totaling $62,500.

This means that Baya Bar earns the entire development fee as soon as the agreement is signed, regardless of whether the franchisee ever opens any locations. The franchisee bears the risk of site selection, construction, and other factors that could delay or prevent the openings. The FDD does state that the developer will receive credit from the development fee to be applied to the initial franchise fee due under the initial franchise agreement. Specifically, the developer will receive a $35,000 credit for the first Baya Bar outlet, a $15,000 credit for the second Baya Bar outlet, and a $12,500 credit for each additional outlet.