How does the Bojangles's Item 5 development fee relate to the estimated initial investment for a restaurant in Item 7?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
velopment Fee
You must pay a development fee of $10,000 for each Restaurant that we authorize you to develop when you sign the Development Agreement regardless of whether you actually develop Restaurants after that time. When you sign the Development Agreement, you also will sign a Franchise Agreement for the first Restaurant that you plan to develop.
The development fee is fully earned and non-refundable in consideration of administrative and other expenses we incur in entering into the Development Agreement and for our lost or deferred opportunity to enter into the Development Agreement with others.
During our previous fiscal year, the development fee paid to us for each Restaurant under applicable development agreements was $10,000 for our standard development.
Franchise Fee
Under the Franchise Agreement, you must pay a franchise fee of $35,000 by the construction commencement deadline of the traditional Restaurant that you agreed to develop according to the development schedule in your Development Agreement.
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, the development fee outlined in Item 5 is a key component of the initial investment detailed in Item 7. Specifically, Item 5 states that a franchisee must pay a development fee of $10,000 for each restaurant they are authorized to develop under a Development Agreement. This fee is paid when the Development Agreement is signed, regardless of whether the franchisee ultimately develops the restaurants. This upfront payment is considered fully earned and non-refundable by Bojangles to cover administrative and other expenses related to entering the Development Agreement, as well as the opportunity cost of not offering the agreement to someone else.
Item 7 acknowledges that franchisees will be required to make various expenditures, in addition to those described in Items 5 and 6, to commence restaurant operations. Item 7 also clarifies how the development fee interacts with the franchise fee. While the franchise fee for a traditional Bojangles restaurant is $35,000, the $10,000 development fee paid under the Development Agreement is credited towards this franchise fee, provided the franchisee signs the Franchise Agreement and pays the franchise fee by the time construction begins. This means that while the initial franchise fee appears high, the franchisee has already covered a portion of it through the development fee.
For a prospective Bojangles franchisee, this means that the initial financial outlay includes a $10,000 per restaurant development fee, which contributes to the overall initial investment. This fee is non-refundable, so it's essential to carefully consider the commitment to develop the restaurants outlined in the Development Agreement. However, this fee is not an additional cost on top of the franchise fee, but rather a portion of it paid upfront. Understanding this relationship between the development fee and the franchise fee is crucial for accurately assessing the financial requirements of opening a Bojangles franchise.