What is the initial franchise fee for the second Bevaris Alliance franchise?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
States of America.
Cash consists of cash and money market funds which are considered to be cash or cash equivalents.
Deferred Franchise Development Costs. Costs incurred in connection with the development of the franchise concept, offering documents and operations manuals have been deferred. The costs are being amortized using the straight-line method over the 5-year estimated useful life of the asset. Such amortization will begin when franchise sales commence.
Initial franchise fees and royalties. Initial franchise fee is recognized when the obligations required by the franchise agreement has been substantially performed by the Company which is when the franchisee begins operating the franchised business. Initial franchise fees is $5,000 for the first franchise, $3,750 for the second franchise and $
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the initial franchise fee for the first franchise is $5,000, while the fee for the second franchise is $3,750. For each franchise after the second, the initial franchise fee is $2,500.
Bevaris Alliance recognizes the initial franchise fee as revenue when it has substantially performed its obligations under the franchise agreement, which occurs when the franchisee begins operating their business. These obligations include site selection, providing operations manuals and marketing plans, maintaining a company-sponsored website, providing initial training, and offering other services necessary for the franchisee to commence operations.
This tiered fee structure incentivizes franchisees to expand their operations by reducing the financial burden of opening additional locations. It is a fairly common practice in the franchise industry to offer discounted franchise fees for additional units, as it benefits both the franchisor and franchisee through increased brand presence and economies of scale.