When do I sign a Franchise Agreement for Hawaiian Bros Island Grill after signing a Development Agreement?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
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The Development Agreement gives you the right and obligation to develop one or more Restaurants. You will sign a Franchise Agreement after you secure a suitable Restaurant site and have signed a lease for such site. You pay a $50,000 franchise fee deposit for the first Restaurant to be developed under the Development Agreement when you sign the Development Agreement. If you are granted development rights for additional Restaurants under the same Development Agreement, you must pay a franchise fee deposit equal to $25,000 for each additional Restaurant that you commit to develop when you sign the Development Agreement. The franchise fee deposit is fully earned in consideration of the development rights granted in the Development Agreement and is not refundable. The franchise fee deposit will be credited against the franchise fee due under the Franchise Agreement for the Restaurant to which it applies if you timely open the Restaurant. If you fail to timely open a Restaurant, you will forfeit the franchise fee deposit allocated to such Restaurant and it will become our property. You must pay the remaining balance of the franchise fee for a Restaurant upon signing a Franchise Agreement for
Source: Item 5 — INITIAL FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Hawaiian Bros Island Grill's 2025 Franchise Disclosure Document, if you enter into a Development Agreement, you will sign a Franchise Agreement after you secure a suitable Restaurant site and have signed a lease for that site. When you sign the Development Agreement, you also pay a $50,000 franchise fee deposit for the first Restaurant to be developed. If you are granted development rights for additional Restaurants under the same Development Agreement, you must pay a franchise fee deposit equal to $25,000 for each additional Restaurant that you commit to develop when you sign the Development Agreement.
The franchise fee deposit is compensation for the development rights granted in the Development Agreement and is not refundable. This deposit will be credited against the franchise fee due under the Franchise Agreement for the Restaurant to which it applies if you open the Restaurant on time. If you fail to open a Restaurant on time, you will forfeit the franchise fee deposit allocated to that Restaurant, and it will become the property of Hawaiian Bros Island Grill. You must pay the remaining balance of the franchise fee for a Restaurant upon signing a Franchise Agreement for that Restaurant.
In the franchise industry, it is common for franchisors to require a deposit or initial fee when a franchisee signs a development agreement. This fee compensates the franchisor for granting the franchisee the exclusive right to develop a certain territory. The deposit is usually non-refundable but is often credited towards the initial franchise fee when the franchisee opens a location. The specific terms and conditions of the development agreement, including the amount of the deposit, the development schedule, and the consequences of failing to meet the development obligations, can vary significantly from franchise to franchise.