Under what circumstances is the development fee for a Big Blue Swim School DRA refundable?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The development fee generally is not refundable under any circumstances. If you sign the DRA, pay the development fee, and then choose for any reason not to perform (in which case we terminate the DRA), we have the right to keep the entire development fee and need not return any money to you. However, if we exercise our Qualified Site Lease Rights described in Item 12 and you then elect to develop one less BIG BLUE Swim School in your development territory, we will refund to you the pro rata portion of the development fee allocable to the School that is the subject of the Qualified Site Lease Rights.
Source: Item 5 — INITIAL FEES (FDD pages 12–13)
What This Means (2025 FDD)
According to Big Blue Swim School's 2025 Franchise Disclosure Document, the development fee paid under a Development Rights Agreement (DRA) is generally non-refundable. This fee compensates Big Blue Swim School for granting the franchisee the rights to develop multiple locations within a specific territory. Typically, if a franchisee decides not to proceed with the development after signing the DRA and paying the fee, Big Blue Swim School retains the entire development fee.
However, there is one specific circumstance under which a portion of the development fee may be refundable. If Big Blue Swim School exercises its Qualified Site Lease Rights, as described in Item 12 of the FDD, and the franchisee then elects to develop one less Big Blue Swim School in their designated territory, the franchisee will receive a pro rata refund. This refund will be equivalent to the portion of the development fee that was allocated to the specific school no longer being developed due to the exercised Qualified Site Lease Rights.
In summary, while the development fee is typically non-refundable, a franchisee may receive a partial refund if Big Blue Swim School exercises its right to lease a site, leading to a reduction in the number of schools the franchisee is obligated to develop. This exception provides a limited degree of financial protection for the franchisee in specific situations where Big Blue Swim School's actions impact the development plan.