Under what circumstances, if any, is the Development Fee refundable for a Floyds 99 franchise?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
is reference
incorporated herein, is true, complete, accurate and not misleading, and, in accordance with the information contained in the Statement of Ownership, the controlling ownership of the FLOYD'S 99 developer business is held by Developer. Developer shall promptly provide Franchisor with a written notification if the information contained in the Statement of Ownership changes at any time during the term of this Agreement and shall comply with the applicable transfer provisions contained in Article 8 herein and in the Franchise Agreement. In addition, if Developer is an entity, all of the owners of Developer shall sign the Guaranty and Assumption of Developer's Obligations attached hereto as Exhibit II.
4. INITIAL FRANCHISE AND DEVELOPMENT FEES
4.1 Fees. Concurrently with the execution of this Agreement, Franchisor acknowledges that in consideration of the development rights gr
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the development fee is generally nonrefundable. Specifically, the FDD states that once the Development Fee is paid to Floyds 99, it is considered fully earned and will not be refunded under any circumstances. This fee compensates Floyds 99 for granting development rights, covering administrative expenses, and for potential business opportunities that Floyds 99 may have lost or deferred due to the agreement with the developer. The development fee is $49,500 for each of the first and second Floyds 99 shops to be developed, and $34,500 for each remaining barbershop to be developed.
This policy means that a prospective Floyds 99 developer should be certain of their ability and commitment to fulfill the development schedule and other obligations before paying the Development Fee. Since the fee is nonrefundable, any changes in the developer's circumstances or failure to meet the development requirements will not result in a return of the fee. This is a standard practice in franchising, as the initial fees often cover the franchisor's upfront costs in evaluating and setting up the franchisee.
However, there is an addendum for the state of Illinois that modifies this policy. For franchisees in Illinois, the payment of the development fee and initial franchise fee is deferred until Floyds 99 completes its initial obligations and the franchisee is open for business. This deferral is required by the Illinois Attorney General's Office based on Floyds 99's financial statements. This means that in Illinois, the development fee is not paid upfront and is only due once the franchisee is operational, providing a level of financial protection to franchisees in that state.