Is the Beauty Bungalows Development Fee refundable?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon execution of this Agreement, you must pay us a development fee in the amount specified in Appendix A (the "Development Fee"), which is based on the initial franchise fee you must pay for each Franchised Business that you develop (the "Franchise Fee", which is also specified in Appendix A). The Development Fee will be credited towards 100% of the Franchise Fee due under the Franchise Agreement for each Franchised Business that you develop pursuant to this Agreement, including the Initial Franchise
Agreement. The Development Fee is fully earned by us when we and you sign this Agreement and is nonrefundable, even if you do not comply with the Development Schedule.
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens
Source: Item 23 — RECEIPTS (FDD pages 48–177)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the development fee is generally nonrefundable. Specifically, upon signing the Area Development Agreement, the franchisee must pay Beauty Bungalows a development fee, the amount of which is specified in Appendix A. This fee is based on the initial franchise fee required for each Beauty Bungalows franchised business the franchisee intends to develop. The FDD states that the development fee will be credited toward 100% of the franchise fee due under the Franchise Agreement for each franchised business developed under the Area Development Agreement, including the Initial Franchise Agreement.
However, the 2025 Beauty Bungalows FDD stipulates that the development fee is fully earned by Beauty Bungalows once the Area Development Agreement is signed by both parties. The FDD explicitly states that the development fee is nonrefundable, even if the franchisee fails to comply with the development schedule outlined in the agreement. This means that if a franchisee is unable to open the number of locations specified in the development schedule, they will not receive a refund of the development fee.
There is an exception to the non-refundability of the development fee for franchisees in Maryland. Based upon Beauty Bungalows' financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees in Maryland shall be deferred until Beauty Bungalows completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers in Maryland shall be deferred until the first franchise under the development agreement opens. This deferral provides some protection to franchisees in Maryland, as they do not have to pay the fees until certain conditions are met.