Is the Ella Cafe Development Fee refundable, and if so, under what circumstances?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 3.1. Development Fee. Upon execution of this Agreement, Developer must pay Franchisor a Development Fee in the amount set forth in the Key Terms ("Development Fee"). The Development Fee will be an amount equal to 100% of the initial franchise fee for the first Coffee House to be developed, plus of the applicable reduction in the initial franchise fee for each additional Coffee House to be developed hereunder. When each Franchise Agreement is signed, Franchisor will credit the amount already paid to the applicable initial franchise fee due on Developer's behalf. The Development Fee is fully earned by Franchisor when paid and is not refundable, in whole or in part, under any circumstances.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the Development Fee is not refundable under any circumstances. The Development Fee is paid upon the execution of the Development Agreement. This fee is an amount equal to 100% of the initial franchise fee for the first Coffee House to be developed, plus the applicable reduction in the initial franchise fee for each additional Coffee House to be developed under the agreement.
When each Franchise Agreement is signed, Ella Cafe will credit the amount already paid to the applicable initial franchise fee due on the developer's behalf. This means that while the Development Fee itself is non-refundable, it is applied towards the initial franchise fees for each Ella Cafe location the developer opens.
This non-refundable policy is a fairly standard practice in the franchise industry. It is important for prospective Ella Cafe developers to fully understand this policy and ensure they have carefully considered their ability to fulfill the development obligations before entering into the agreement and paying the Development Fee.