How is the development fee calculated for a Hyper Kidz Multi-Unit Development Agreement if a franchisee commits to developing three Hyper Kidz businesses?

According to Hyper Kidz's 2024 Franchise Disclosure Document, the development fee for a Multi-Unit Development Agreement is calculated based on the number of Hyper Kidz businesses the franchisee commits to developing. The development fee is due in a lump sum when the Multi-Unit Development Agreement is signed and is non-refundable. For the first Hyper Kidz Business to be developed, the franchisee pays 100% of the initial franchise fee, which is $42,500. For each additional Hyper Kidz Business to be developed in the Development Area, the franchisee pays 50% of the initial franchise fee, which is $21,250.

For example, if a franchisee commits to developing three Hyper Kidz businesses, the development fee is calculated as follows: $42,500 for the first business, plus (2 x $21,250 = $42,500) for the two additional businesses, resulting in a total development fee of $85,000. A portion of this development fee will be used to pay the initial franchise fee for the first Hyper Kidz Business in full, which is signed at the same time as the Multi-Unit Development Agreement.

For each Hyper Kidz Business developed after the first one, a pro rata portion of the development fee is applied toward the initial franchise fee due for that Hyper Kidz Business. The remaining balance of the initial franchise fee, which is $19,750, is payable in a lump sum when the Franchise Agreement for that Hyper Kidz Business is signed. This structure incentivizes multi-unit development while providing a payment plan for the initial franchise fees of subsequent locations.