What is the calculation for the Development Fee for a Hyper Kidz development agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
r which a Development Right is granted hereunder shall be established and operated pursuant to a Franchise Agreement to be entered into between you and us in accordance with Section 3.1 hereof.
- 1.3 Except as otherwise provided in this Agreement, we shall not establish, nor franchise anyone other than you to establish, a Hyper Kidz Business in the Development Area during the term of this Agreement, provided you are not in default hereunder.
- 1.4 This Agreement is not a Franchise Agreement and does not grant to you any right to use the Marks or System.
- 1.5 You shall have no right under this Agreement to franchise others under the Marks or System.
SECTION 2: DEVELOPMENT FEE; INITIAL FRANCHISE FEE
In consideration of the Development Rights granted herein, you shall pay to us a development fee of ___________________________ Thousand Dollars ($____________), which is calculated as one hundred percent (100%) of the initial franchise fee for the first Hyper Kidz Business to be developed hereunder, plus a deposit equal to fifty percent (50%) of the initial franchise fee multiplied by the number of additional Hyper Kidz Businesses to be developed pursuant to this Agreement (the "Development Fee"). The Development Fee is payable in a lump sum upon execution of this Agreement and is not refundable under any circumstances.
The initial franchise fee for each Hyper Kidz Business to be developed hereunder shall be Thirty-Nine Thousand Five Hundred Dollars ($39,500).
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the development fee is calculated as 100% of the initial franchise fee for the first Hyper Kidz Business, plus a deposit equal to 50% of the initial franchise fee multiplied by the number of additional Hyper Kidz Businesses to be developed under the agreement. This fee is payable in a lump sum upon execution of the agreement and is non-refundable. The initial franchise fee for each Hyper Kidz Business is $39,500.
For a prospective Hyper Kidz franchisee, this means that the development fee will vary depending on the number of units they commit to developing. For example, if a franchisee commits to developing two Hyper Kidz Businesses, the development fee would be $39,500 (100% of the initial franchise fee for the first business) plus $19,750 (50% of the initial franchise fee) for the additional business, totaling $59,250. This fee must be paid upfront and is non-refundable, regardless of whether the franchisee successfully develops all of the agreed-upon locations.
Hyper Kidz applies a portion of the Development Fee to satisfy in full the initial franchise fee for the first Hyper Kidz Business. For each additional Hyper Kidz Business the franchisee develops, when they execute the Franchise Agreement for that Hyper Kidz Business, Hyper Kidz will apply a pro rata portion of the Development Fee toward the initial franchise fee due for such Hyper Kidz Business and the balance of the initial franchise fee, or $19,750, is payable in a lump sum upon execution of such Franchise Agreement.
It is important for potential Hyper Kidz franchisees to carefully consider the number of units they can realistically develop within the specified timeframe, as the development fee is non-refundable. This upfront investment can be significant, and franchisees should ensure they have adequate capital and resources to meet their development obligations. Failing to meet the development schedule could result in a default under the agreement.