If a Beauty Bungalows franchisee transfers to a Lead, what is the maximum Lead Fee that can be charged?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
rent members, shareholders or limited partners of Franchisee;
- (f) Franchisee pays any third-party broker or agency fees that are incurred by Franchisor, Franchisee or the transferee as a result of the transfer;
- (g) If the transferee is a person or entity who was a "Lead" of Franchisor's (defined below) before Franchisee became aware of or was introduced t
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, a franchisee who transfers their business to a "Lead" may be subject to a Lead Fee. A "Lead" is defined as someone who has contacted Beauty Bungalows Franchising, LLC about purchasing a franchise in a new market area, or a lead located in their contact management system, but does not include existing franchisees.
The Lead Fee is calculated as ten percent (10%) of the sales price between the franchisee and the transferee for the interest transferred. However, the maximum Lead Fee that Beauty Bungalows can charge is capped at $50,000.
This fee is intended to compensate Beauty Bungalows for the resources they invested in attracting and identifying the Lead, as they potentially lose the opportunity to grant a new franchise directly. It is important for prospective franchisees to understand this potential cost when considering a transfer of their franchise, especially if the buyer originated as a lead from Beauty Bungalows's marketing efforts.