How is the transfer fee calculated for the Face Foundrie Area Development Agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.4 Transfer Fee*.* At the request of Franchisor, Area Developer shall pay a transfer fee of an amount equal to Franchisor's then-current Franchise Fee for each Franchised Facial Bar that remains to be developed and opened in order to satisfy the Development Schedule, but not less than fifty percent (50%) of the Area Development Fee paid.
Additionally, for any Franchise Agreements executed pursuant to this Agreement that are transferred, the transfer fee due under such Franchise Agreement(s) shall be paid to Franchisor pursuant to the terms of such Franchise Agreement(s).
- 7.5 Transfer to Entity Formed for by Area Developer*.* Notwithstanding anything to the contrary in this Section 7, if Area Developer is an individual and seeks to transfer this Agreement to a corporation, partnership, or limited liability company formed for the convenience of ownership, the conditions of Sections 7.4 shall not apply, and Area Developer may undertake such transfer, provided that: (a) Area Developer owns one hundred percent (100%) of the equity interest in the transferee entity; (b) Area Developer and any other Principal(s) personally guarantee, in a written guaranty satisfactory to Franchisor, the performance of the obligations of the Area Developer under this Agreement; (c) Area Developer executes a Transfer of Franchise form as prescribed and approved by Franchisor; (d) such transferee entity is newly organized and its business purpose is confined exclusively to developing and operating the Franchised Facial Bars; and (e) Area Developer and any other Principal(s) execute any and all other ancillary agreements as Franchisor may require.
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the transfer fee for the Area Development Agreement is calculated based on the number of Franchised Facial Bars remaining to be developed and opened to satisfy the Development Schedule. The Area Developer will pay a transfer fee equal to Face Foundrie's then-current Franchise Fee for each remaining bar. However, the transfer fee will not be less than fifty percent (50%) of the Area Development Fee initially paid.
This means that if an Area Developer decides to transfer their agreement to another party, they will incur a fee that could be substantial, depending on how many locations are still left to be developed. The fee is designed to compensate Face Foundrie for the transfer and to ensure that the new Area Developer is committed to fulfilling the development schedule. The transfer fee also applies to any Franchise Agreements executed pursuant to the Area Development Agreement that are transferred, and those fees will be paid to Face Foundrie according to the terms of those individual Franchise Agreements.
There is an exception to the transfer fee under specific circumstances. If the Area Developer is an individual and seeks to transfer the Area Development Agreement to a corporation, partnership, or limited liability company formed for ownership convenience, the transfer fee conditions do not apply. However, this exception is conditional on the Area Developer owning 100% of the equity interest in the transferee entity, the Area Developer and any other Principals personally guaranteeing the obligations, the Area Developer executing a Transfer of Franchise form, the transferee entity being newly organized and focused exclusively on developing and operating Franchised Facial Bars, and the Area Developer and Principals executing any other required ancillary agreements.