Is the Development Fee for Corner Bakery Cafe refundable?
Corner_Bakery_Cafe Franchise · 2025 FDDAnswer from 2025 FDD Document
refundable for any reason.
Development Fee
When you sign the Development Agreement, you will pay a development fee in the amount of $20,000 for each Franchised Cafe that you agree to develop (the "Development Fee"). The Development Fee is fully earned by us when paid by you, and it is not refundable in consideration of administrative and other expenses incurred by us and for the development opportunities lost or deferred as a result of the rights granted to you in the Development Agreement. In addition, the Development Fee is not credited against any other fees that you will pay to us. You must agree to develop at least two
Source: Item 5 — INITIAL FEES (FDD page 11)
What This Means (2025 FDD)
According to Corner Bakery Cafe's 2025 Franchise Disclosure Document, the Development Fee is generally not refundable. Specifically, when signing a Development Agreement, a franchisee must pay a $20,000 Development Fee for each Corner Bakery Cafe they agree to develop. This fee is considered fully earned by Corner Bakery Cafe upon payment and is not refundable. This non-refundable policy accounts for the administrative and other expenses Corner Bakery Cafe incurs, as well as the development opportunities they forgo by granting the franchisee exclusive development rights. The Development Fee is also not credited towards any other fees the franchisee will owe to Corner Bakery Cafe.
This policy means that a prospective Corner Bakery Cafe franchisee should be certain of their commitment and financial readiness before signing a Development Agreement and paying the associated fees. The franchisee will not be able to recover the Development Fee, even if they later decide not to proceed with the development schedule or are unable to meet the required deadlines. This is a standard practice in franchising, as the franchisor incurs costs and loses other potential opportunities once they award development rights to a specific franchisee.
However, there is an exception for Maryland developers. According to the addendum to the Corner Bakery Cafe Area Development Agreement required for Maryland developers, all development fees and initial payments owed by the franchisee can be deferred until the first Cafe under the agreement opens. This exception is based on the financial condition of Corner Bakery Cafe, as required by the Maryland Securities Commissioner. This deferral provides a significant benefit to Maryland franchisees, as it reduces their upfront financial burden and risk.