Is the initial franchise fee for Baya Bar imposed uniformly on all franchisees?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
ITEM 5 INITIAL FEES
Franchise Agreement: You must pay us an initial franchise fee of $35,000 for the right to establish a single Baya Bar Shop under a Franchise Agreement. This fee is used in part for working capital and in part for profit. If you are purchasing your second Shop, the initial franchise fee will be reduced to $30,000, and if you are purchasing your third or later Shop, the initial franchise fee will be reduced to $25,000. The initial franchise fee is imposed uniformly on all franchisees.
If (a) you fail to complete the pre-opening training program to our satisfaction, after having given you the opportunity to re-take our pre-opening training program at your expense or (b) we conclude, no more than ten days after you complete the pre-opening training program, that you do not have the ability to satisfactorily operate your Franchised Business, then we have the right to terminate your Franchise Agreement. If we terminate your Franchise Agreement, we will refund your initial franchise fee less any out-of-pocket costs we have incurred. You must sign any documents we require, including a confidentiality agreement and general release, before any money will be refunded to you. The initial franchise fee is not refundable under any other circumstances.
Multi-Unit Development Agreement: If you and we agree that you will develop and operate multiple Baya Bar Franchised Businesses, then you will pay to us a development fee equal to 100% of the initial franchise fee for the first Shop to be developed, plus 50% of the reduced initial franchise fee for each additional Shop you commit to develop under the MUDA. For example, if you commit to develop three Shops, the development fee is calculated as $35,000 + (50% of $30,000=$15,000) + (50% of $25,000=$12,500) = $62,500. The development fee is imposed uniformly on all multi-unit developers and is fully earned by us when received. These franchise fees are refundable only as described abov
Source: Item 5 — INITIAL FEES (FDD pages 10–11)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the initial franchise fee is generally imposed uniformly on all franchisees. The standard initial franchise fee for a single Baya Bar Shop is $35,000. However, this fee is reduced for franchisees purchasing multiple locations. Specifically, the initial franchise fee is reduced to $30,000 for a second shop and $25,000 for a third or subsequent shop.
For franchisees entering into a Multi-Unit Development Agreement (MUDA), a development fee is required. This 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 committed to under the MUDA. For example, committing to three shops would result in a development fee of $62,500, calculated as $35,000 + (50% of $30,000) + (50% of $25,000). The development fee is also imposed uniformly on all multi-unit developers.
It's important to note that the initial franchise fee is generally non-refundable, except in specific circumstances where Baya Bar terminates the Franchise Agreement due to the franchisee's failure to complete the pre-opening training program satisfactorily or inability to operate the franchised business. In such cases, Baya Bar will refund the initial franchise fee less any out-of-pocket costs incurred. Prospective franchisees should carefully consider these conditions and the implications of the fee structure before entering into a franchise agreement.