Is the initial franchise fee for Baya Bar used for working capital?
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
Source: Item 5 — INITIAL FEES (FDD pages 10–11)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a portion of the initial franchise fee is allocated to working capital. The initial franchise fee is $35,000 for the first Baya Bar shop. However, the fee is reduced to $30,000 for the second shop and $25,000 for the third or subsequent shops.
This initial fee covers the right to establish a single Baya Bar shop under the Franchise Agreement. Baya Bar specifies that the fee is used partly for working capital and partly for profit.
It is important to note that the initial franchise fee is generally non-refundable, except in specific circumstances, such as if the franchisee fails to complete the pre-opening training program satisfactorily or if Baya Bar concludes that the franchisee cannot satisfactorily operate the franchised business. In such cases, Baya Bar will refund the initial franchise fee less any out-of-pocket costs incurred.