How is the initial franchise fee determined for each additional Baya Bar outlet?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
ed 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.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the initial franchise fee is determined based on the number of outlets a developer commits to opening. The initial franchise fee for the first Baya Bar outlet is $35,000.00. For the second Baya Bar outlet, the initial franchise fee is $30,000.00. For the third and each subsequent Baya Bar outlet, the initial franchise fee is $25,000.00.
Multi-unit developers also pay a development fee. The development fee 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 developer receives a $35,000 credit from the development fee, which is applicable to the initial franchise fee due under the initial Franchise Agreement as payment in full for the first outlet. 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, which is applied as 50% payment to the initial franchise fee.
This tiered fee structure incentivizes multi-unit development by reducing the financial burden for each additional location. However, the development fee is fully earned upon signing the Multi-Unit Development Agreement and is non-refundable, regardless of whether all outlets are eventually opened. Prospective developers should carefully consider their ability to meet the development schedule and financial obligations before committing to a multi-unit agreement with Baya Bar.