When is the Development Fee fully earned by Corner Bakery Cafe?
Corner_Bakery_Cafe Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon execution of this Agreement, you must pay us a development fee in the amount specified on Appendix A (the "Development Fee"). The Development Fee is fully earned by us when we and you sign this Agreement and is non-refundable, even if you do not comply with the Development Schedule. The Development Fee will not be credited against any other fees that you must pay us under the Franchise Agreements, including any Initial Franchise Fees (as defined in the applicable Franchise Agreement). Upon execution of each Franchise Agreement, you must pay us our then-current Initial Franchise Fee and any other fees specified in such Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 55–227)
What This Means (2025 FDD)
According to Corner Bakery Cafe's 2025 Franchise Disclosure Document, the Development Fee is considered fully earned by Corner Bakery Cafe upon the signing of the Area Development Agreement by both parties. This fee, the amount of which is specified in Appendix A, becomes non-refundable at this point, regardless of whether the franchisee fulfills the Development Schedule.
This means that a prospective Corner Bakery Cafe franchisee needs to be certain of their commitment and ability to meet the development obligations before signing the Area Development Agreement. The Development Fee will not be credited towards any other fees, such as the Initial Franchise Fees required for each individual Corner Bakery Cafe franchise agreement. The franchisee must also sign their Initial Franchise Agreement when signing the Area Development Agreement.
This arrangement is fairly standard in area development franchise agreements. The non-refundable nature of the development fee underscores the importance of thorough due diligence and a solid business plan before entering into such an agreement with Corner Bakery Cafe. Franchisees should carefully review the Development Schedule and ensure they have the resources and capabilities to meet the specified deadlines for site acquisition and cafe openings.