How will the Development Fee be applied to the Franchise Fee for each Beem Light Sauna studio I develop?
Beem_Light_Sauna Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.1 Franchise Fee. For each Studio that you develop pursuant to this Agreement, the initial franchise fee due under the applicable Franchise Agreement (the "Franchise Fee") for such Studio will be specified in Appendix A.
- 2.2 Development Fee. Upon execution of this Agreement, you must pay us a development fee in the amount specified on Appendix A (the "Development Fee"), which will be equal to 100% of the aggregate of all of the Franchise Fees due for the Studios that you commit to develop under this Agreement.
- 2.3 Application of Fee and Non-refundability. The Development Fee will be credited towards the Franchise Fee due for each Studio that you develop pursuant to this Agreement. Thus, there shall be no additional Franchise Fee due under each Franchise Agreement signed pursuant to this Development Agreement. The Development Fee is fully earned by us when we and you sign this Agreement and is non-refundable, even if you do not develop Studios in accordance with the Development Schedule.
Source: Item 23 — RECEIPT (FDD pages 71–230)
What This Means (2025 FDD)
According to Beem Light Sauna's 2025 Franchise Disclosure Document, if you sign a Development Agreement, the development fee will be credited toward the franchise fee due for each studio you develop. The development fee is equal to 100% of the aggregate of all franchise fees due for the studios that you commit to develop under the Development Agreement.
In practice, this means that you will not have to pay an additional franchise fee for each individual Beem Light Sauna studio as you develop it, because the development fee covers the full amount of these franchise fees. The development fee is fully earned by Beem Light Sauna once the Development Agreement is signed and is non-refundable. This is the case even if you do not end up developing all of the studios outlined in the development schedule.
This arrangement benefits Beem Light Sauna by securing commitment upfront for multiple locations. However, it poses a financial risk for the franchisee, as the development fee is non-refundable, regardless of whether all studios are eventually opened. Therefore, a prospective franchisee should carefully consider their ability to meet the development schedule before entering into a Development Agreement with Beem Light Sauna.