What is the relationship between the Bojangles's Item 5 development fee and the franchisor's description as described in Item 1?
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, Item 5 details the initial fees, including the development fee and franchise fee. A development fee of $10,000 is required for each restaurant a developer is authorized to develop under a Development Agreement. This fee is paid when the Development Agreement is signed, regardless of whether the restaurants are eventually developed. Bojangles considers the development fee fully earned and non-refundable due to the administrative and other expenses they incur when entering into the Development Agreement, as well as the lost opportunity to contract with others.
Item 5 further explains that a franchise fee of $35,000 is due by the construction commencement deadline for each traditional restaurant developed under a Development Agreement. However, Bojangles will credit the development fee paid for each restaurant against the franchise fee, provided the Franchise Agreement is signed and the franchise fee is paid by the time construction commences. This means that the $10,000 development fee effectively serves as a partial pre-payment of the full $35,000 franchise fee.
For franchisees entering into a Development Agreement, this structure reduces the initial financial burden, as the development fee is spread out and later credited towards the franchise fee. However, it's important to note that the development fee is non-refundable, so if the franchisee fails to develop the restaurant, they will not recoup the $10,000 paid. This arrangement incentivizes developers to proceed with their development plans once the agreement is in place. Bojangles also offers a Development Incentive Program for Minorities, Women, and Veterans, which may further reduce the franchise fee by 50% for the first two qualifying restaurants under certain conditions.