What is the Area Developer required to pay Hck Hot Chicken when executing the Franchise Agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
per (or an Affiliate of Area Developer) and Franchisor which is then in full force and effect, and (b) Franchisor or its Affiliates may thereafter itself construct, equip, open, own or operate, and license others to (or grant development rights to) construct, equip, open, own or operate Restaurants at any location(s) (within or outside of the Development Area), without any restriction, subject only to the territorial rights granted, if any, for any then-existing Restaurant pursuant to a validly subsisting Franchise Agreement executed for such Restaurant.
SECTION 5 PAYMENTS BY AREA DEVELOPER
5.1 Development Fee. Concurrently with the execution of this Development Agreement, Area Developer shall pay to Franchisor, in cash or by certified check, the Development Fee, which is nonrefundable under any circumstances, even if the Area Developer fails to open any Restaurants. The "Development Fee" means the amount set forth in Exhibit A. Franchisor will credit a portion of the Development Fee against the initial franchise fee for each additional Restaurant after the first Restaurant until the Development Fee is exhausted.
Source: Item 23 — RECEIPTS (FDD pages 55–245)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, an Area Developer must pay a Development Fee to Hck Hot Chicken when signing the Area Development Agreement. This fee must be paid in cash or by certified check. The amount of the Development Fee is detailed in Exhibit A of the Area Development Agreement. This Development Fee is nonrefundable, regardless of whether the Area Developer opens any Hck Hot Chicken restaurants.
Furthermore, a portion of the Development Fee will be credited towards the initial franchise fee for each additional Hck Hot Chicken restaurant opened after the first one, until the Development Fee is fully used. The initial franchise fee for each restaurant is $40,000, and this amount is calculated as part of the Development Fee for the first Franchise Agreement.
In the franchise industry, it is common for franchisors to charge an initial franchise fee and development fees. However, the non-refundable nature of the Development Fee, even if no restaurants are opened, is a critical point for prospective Hck Hot Chicken Area Developers to consider. They should carefully evaluate their ability to meet the development schedule and open the agreed-upon number of restaurants to avoid losing this initial investment.