Under what conditions are the initial fees for a Chocolate Bash franchise deferred in California?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
isor are deferred until Franchisor has delivered all pre-opening obligations and Franchisee is open for business.
4.2 Training Fee. Upon signing this Agreement, Franchisee shall pay a training fee of $15,000 to CB Franchising. This fee is not refundable.
By order of the California Department of Business Oversight, all initial fees payable to the Franchisor are deferred until Franchisor has delivered all pre-opening obligations and Franchisee is open for business.
4.3 Site Selection Fee. Upon signing this Agreement, Franchisee shall pay a site selection fee of $5,000 to CB Franchising. This fee is not refundable.
By order of the California Department of Business Oversight, all initial fees payable to the Franchisor are deferred until Franchisor has delivered all pre-opening obligations and Franchisee is open for business.
4.4 Royalty Fee. Franchisee shall pay CB Franchising a weekly royalty fee (the "Royalty Fee") equal to 6% of Gross Sales. The Royalty Fee for any given month is due by the 5th day of the following month.
4.5 Marketing Contributions.
- (a) Marketing Fund Contribution.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the collection of all initial fees from California franchisees is deferred until Chocolate Bash has completed all of its pre-opening obligations and the franchisee is open for business. This deferral is by order of the California Department of Business Oversight.
This means that a new Chocolate Bash franchisee in California will not have to pay the initial franchise fee, training fee of $15,000, or site selection fee of $5,000 upfront. Instead, these fees are deferred until Chocolate Bash has fulfilled its pre-opening responsibilities, such as providing site selection assistance, training, and pre-opening plans, and the Chocolate Bash location is open and ready to operate.
For California franchisees who sign a development agreement, which allows them to open multiple units, the payment of the development and initial fees attributable to each specific unit is deferred until that particular unit is open. This can significantly reduce the initial financial burden on franchisees, allowing them to allocate capital to other essential startup costs. This arrangement is particularly beneficial for multi-unit developers as it staggers the fee payments, aligning them with the opening of each individual location.