How does the Preliminary Agreement Deposit for Ben Jerrys in Item 5 relate to the initial franchise fee?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
ere is no bankruptcy information required to be disclosed in this Item.
ITEM 5 INITIAL FEES
Preliminary Agreement Deposit
If you will operate a Scoop Shop (which is not developed and operated under a Development Agreement), you will sign a Preliminary Agreement before you sign the Franchise Agreement. When you sign the Preliminary Agreement, you must pay us a non-refundable deposit (the "Preliminary Agreement Deposit"), which will be applied to your initial franchise fee. For new franchisees, the Preliminary Agreement Deposit will be $10,000; for existing franchisees, the Preliminary Agreement Deposit will be $5,000. You must locate a site during the "Evaluation Period," which is a period of twelve (12) months from the signing of the Preliminary Agreement. You may request up to two (2) six-month extensions of the Evaluation Period – each extension will be for an additional six-month period. A request for an extension of the Evaluation Period must be made to us, in writing, at least thirty (30) days prior to the expiration of the then-current Evaluation Period.
We do not require you to sign a Preliminary Agreement if you are an existing franchisee opening additional locations, or if you are entering into a franchise agreement in connection with a Development Agreement with us.
Initial Franchise Fee
Scoop Shops
When you sign a Franchise Agreement for a Scoop Shop you must pay us the initial franchise fee, which is $39,500, except in the circumstances described below. If you are an existing franchisee and you enter into a Franchise Agreement for an additional Scoop Shop, your initial franchise fee will be $19,750. The initial franchise fee is earned and non-refundable in consideration of administrative and other expenses we incur in entering into the Franchise Agreement. If you signed a Preliminary Agreement, the Preliminary Agreement Deposit (as defined above) will be credited toward the initial franchise fee.
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, if a prospective franchisee signs a Preliminary Agreement before the Franchise Agreement, they must pay a Preliminary Agreement Deposit. For new franchisees, this deposit is $10,000, while existing franchisees pay $5,000. This deposit is non-refundable but is later credited towards the initial franchise fee. Ben & Jerry's does not require a Preliminary Agreement if you are an existing franchisee opening additional locations or entering into a franchise agreement connected with a Development Agreement.
The initial franchise fee for a Ben Jerrys Scoop Shop is $39,500, but this fee is reduced to $19,750 for existing franchisees opening additional locations. The Preliminary Agreement Deposit is applied to this initial franchise fee, reducing the amount the franchisee needs to pay at the time of signing the Franchise Agreement. This deposit arrangement provides Ben Jerrys with funds to cover expenses during the site evaluation period, which can last up to twelve months with possible extensions.
For example, a new Ben Jerrys franchisee would pay a $10,000 Preliminary Agreement Deposit. Upon signing the Franchise Agreement, they would then pay the remaining $29,500 of the $39,500 initial franchise fee. This system helps to offset Ben Jerrys's administrative and other expenses incurred during the franchise process. It also incentivizes the prospective franchisee to proceed with the franchise once a suitable site is found, as the deposit is non-refundable.