When is the initial franchise fee for Baya Bar considered fully earned by the franchisor?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
uccessor franchise agreement for this Franchise as a result of a decision to withdraw from a marketing area or the Territory in which Franchisee's Franchised Business is located.
6. FEES
- 6.1 Initial Franchise and Royalty Fee. As part of the consideration for the right to operate the Franchise granted herein, Franchisee shall pay to Franchisor the following fees:
- 6.1.1 Initial Franchise Fee. Franchisee acknowledges and agrees that the grant of this Franchise and the rights and obligations of the parties under this Agreement constitute the sole and only consideration for the initial franchise fee of Thirty-Five Thousand Dollars ($35,000.00) (the "Initial Fee"). **The Initial Fee is fully earned at the time this Franchise Agreement is signed and is not r
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the initial franchise fee of $35,000 is considered fully earned when the Franchise Agreement is signed. This fee compensates Baya Bar for granting the franchise and outlining the rights and obligations of both parties.
This means that once the agreement is signed, Baya Bar has fulfilled its initial obligation, and the $35,000 is non-refundable, except as outlined in Section 7.2 of the agreement. The franchisee must pay the full $35,000 upon signing the Franchise Agreement.
This is a fairly standard practice in franchising. The initial fee covers Baya Bar's costs associated with granting the franchise, including training, site selection assistance, and other pre-opening support. It is important for a prospective franchisee to understand that this fee is generally non-refundable, so they should carefully evaluate the opportunity before signing the agreement.