If the transferee is an existing Beauty Bungalows franchisee, does the Lead Fee apply?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, the Lead Fee will not apply if the transferee is an existing franchisee of Franchisor;
(h) in the case of a sale to a qualified third-party pursuant to a bona fide written offer, the provision of Sections 14.07 and 14.09 have been satisfied and Franchisee provides Franchisor with a copy of the signed purchase agreement and related documents as reasonably requested by Franchisor and proof of payment of purchase price in a format specified by Franchisor;
(i) the proposed transferee executes a separate franchise agreement with Franchisor, using the then-current form of franchise agreement;
(j) the proposed transferee pays for, attends, and satisfactorily completes the training program for new franchisees unless:
(i) the transferee is a current franchisee in good standing in the System, or
(ii) the transferee is and has been a Manager for a period of one year or more of a Franchise in good standing;
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the Lead Fee does not apply if the transferee is an existing franchisee of Beauty Bungalows. The Lead Fee typically compensates Beauty Bungalows for the lost opportunity of granting a new franchise to the Lead, as the company spends significant resources to attract and identify Leads each year.
For the Lead Fee not to apply, certain conditions must be met. These include satisfying the provisions of Sections 14.07 and 14.09 in the case of a sale to a qualified third party pursuant to a bona fide written offer. Additionally, the franchisee must provide Beauty Bungalows with a copy of the signed purchase agreement and related documents as reasonably requested, along with proof of payment of the purchase price in a format specified by Beauty Bungalows.
The proposed transferee must also execute a separate franchise agreement with Beauty Bungalows, using the then-current form. Furthermore, the proposed transferee is generally required to pay for, attend, and satisfactorily complete the training program for new franchisees. However, this training requirement is waived if the transferee is a current franchisee in good standing within the Beauty Bungalows system or if the transferee has been a Manager for at least one year of a franchise in good standing.