How is the 'Development Fee' for a Beef O Bradys franchise calculated, as referenced in Section 4.1?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
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4. DEVELOPMENT FEE.
- 4.1 Amount and Consideration. When you sign this Agreement, you agree to pay to us a development fee (the "Development Fee") and to abide by the Development Schedule set forth in Section 3.3(b). The Development Fee is not refundable under any circumstance. The Development Fee you must pay will be equal to half the Franchise Fees afforded to you multiplied by the number of Family Sports Pubs you agree to develop. By way of example, if you are required to develop five Family Sports Pubs under the Development Schedule, the Development Fee will be $31,500 ($12,500 + $8,500 + $5,000 + $3,500 + $2,000). After paying the Development Fee, upon entering into each respective Franchise Agreement for the Family Sports Pubs you agree to develop, you must pay us the remaining half of the applicable reduced Franchise Fee.
- Franchise Fees. In connection with your having entered into this Agreement with us, you are entitled to pay us reduced Franchise Fees starting with the second Family Sports Pub you agree to develop. The reduction in the Franchise Fee will be determined in accordance with the following schedule: (i) $25,000 for the first Family Sports Pub; (ii) $17,000 for the second Family Sports Pub; (iii) $10,000 for the third Family Sports Pub; (iv) $7,000 for the fourth Family Sports Pub; and, (v) $4,000 for the fifth and all subsequent Family Sports Pubs to be developed under this Agreement. This payment schedule will repeat for each subsequent set of five Family Sports Pubs you agree to develop. For each Family Sports Pub developed under this Agreement, you are required to pay us half of the Franchise Fee as part of the Development Fee, as described in Section 4.1, and the other half of the Franchise Fee immediately upon executing the Franchise Agreement for each such Family Sports Pub. The Franchise Fees are non-refundable and are fully earned by us on receipt. By way of example, if you are required to develop five Family Sports Pubs under the Development Schedule then upon entering into your first Franchise Agreement you must pay us a Franchise Fee of $12,5
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, the Development Fee is determined by the number of Family Sports Pubs the franchisee agrees to develop within a specific Development Area. The Development Fee is calculated as described in Section 4.1 of the agreement. The document provides an example of how the fee is calculated. If a franchisee is required to develop five Family Sports Pubs under the Development Schedule, the Development Fee totals $31,500. This total is the sum of $12,500 for the first pub, $8,500 for the second, $5,000 for the third, $3,500 for the fourth, and $2,000 for the fifth.
In addition to the Development Fee, the franchisee must also pay a reduced Franchise Fee for each Family Sports Pub. Half of this reduced Franchise Fee is included in the Development Fee, and the remaining half is due upon entering into each respective Franchise Agreement. The Franchise Fees are reduced for subsequent locations. The first Family Sports Pub has a fee of $25,000, the second $17,000, the third $10,000, the fourth $7,000, and the fifth and all subsequent pubs have a fee of $4,000.
For example, when entering into the first Franchise Agreement, the franchisee pays a Franchise Fee of $12,500. For the second, the fee is $8,500, for the third it is $5,000, for the fourth it is $3,500, and for the fifth it is $2,000. This payment schedule repeats for each subsequent set of five Family Sports Pubs the franchisee agrees to develop. These Franchise Fees are non-refundable and are fully earned by Beef O Bradys upon receipt.