What is the name given to the fee a Beauty Bungalows franchisee pays to transfer the business?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
The Lead Fee (including the portion of the sales price) compensates Franchisor for its lost opportunity of potentially granting a new franchise to the Lead as each year Franchisor spends significant resources to attract and identify Leads.
The Lead Fee does not apply if Franchisor directly shares a Lead with Franchisee before Franchisor, in its sole discretion, has had significant contact with the Lead in connection with the possibility of purchasing a Beauty Bungalows franchise.
For purposes of this Section, "Lead" means (a) a person or entity who contacts, or has been contacted by, Franchisor (including our authorized representative or affiliate) in connection with the possibility of purchasing a Beauty Bungalows franchise for a new market area or territory and/or (b) a lead located in our contact management system ("CMS") (in both (a) and (b), a "Lead" does not include someone who is an existing franchisee in the Beauty Bungalows system).
Franchisee acknowledges that "contact" may be in person, in writing, by email, by telephone, or by CMS.
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's 2025 Franchise Disclosure Document, the fee a franchisee pays to transfer the business to a lead is called the "Lead Fee." This fee compensates Beauty Bungalows for the lost opportunity of potentially granting a new franchise to the Lead. Beauty Bungalows spends significant resources each year to attract and identify Leads.
The Lead Fee does not apply if Beauty Bungalows directly shares a Lead with the franchisee before Beauty Bungalows has had significant contact with the Lead regarding the possibility of purchasing a Beauty Bungalows franchise. A "Lead" is defined as someone who contacts, or has been contacted by, Beauty Bungalows in connection with potentially purchasing a Beauty Bungalows franchise for a new market area or territory, or a lead located in their contact management system. However, a Lead does not include someone who is an existing franchisee in the Beauty Bungalows system.
Even if the transfer is to a Lead, the Lead Fee will not apply if the transferee is an existing franchisee of Beauty Bungalows. Additionally, the Lead Fee will not apply if specific conditions are met, including the sale being to a qualified third-party pursuant to a bona fide written offer, Sections 14.07 and 14.09 being satisfied, the franchisee providing Beauty Bungalows with a copy of the signed purchase agreement and related documents, and proof of payment of the purchase price. The proposed transferee must also execute a separate franchise agreement with Beauty Bungalows and complete the training program for new franchisees, unless they are a current franchisee in good standing or have been a Manager for at least one year of a franchise in good standing.