Under what circumstances is the development fee for a Hyper Kidz Multi-Unit Development Agreement refundable?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Multi-Unit Development Agreement
Development Fee: If you sign a Multi-Unit Development Agreement, you must pay us a development fee. The development fee is payable to us in a lump sum when you sign the Multi-Unit Development Agreement and is not refundable under any circumstances.
The development fee is calculated as 100% of the initial franchise fee for the first Hyper Kidz Business to be developed ($42,500), plus 50% of the initial franchise fee ($21,250) for each additional Hyper Kidz Business to be developed in the Development Area. For example, if you commit to develop
three Hyper Kidz Businesses in the Development Area, the development fee is calculated as $42,500 + (2 x $21,250 = $42,500) = $85,000.
We expect that you will sign the Franchise Agreement for your first Hyper Kidz Business at the same time you sign the Multi-Unit Development Agreement, and a portion of the development fee will be used to pay the initial franchise fee for this Hyper Kidz Business in full. 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, and the balance of the initial franchise fee ($19,750) is payable in a lump sum when you sign the Franchise A
Source: Item 5 — INITIAL FEES (FDD pages 9–10)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the development fee for a Multi-Unit Development Agreement is not refundable under any circumstances. When signing a Multi-Unit Development Agreement with Hyper Kidz, the development fee is payable in a lump sum. This fee compensates Hyper Kidz for granting the franchisee the rights to develop multiple locations within a specific Development Area.
The development fee is calculated based on the number of Hyper Kidz Businesses the franchisee commits to developing. The fee is 100% of the initial franchise fee ($42,500) for the first location, plus 50% of the initial franchise fee ($21,250) for each additional location. For example, if a franchisee commits to developing three Hyper Kidz Businesses, the development fee would be $85,000.
Hyper Kidz uses a portion of the development fee to pay the initial franchise fee for the franchisee's first Hyper Kidz Business. For each subsequent Hyper Kidz Business developed, a pro rata portion of the development fee is applied toward the initial franchise fee, with the remaining balance of $19,750 due when the Franchise Agreement is signed for that location. Because the development fee is non-refundable, prospective franchisees should carefully consider their ability to fulfill the development schedule before entering into a Multi-Unit Development Agreement with Hyper Kidz.