When is the Development Fee due to Kitchen Solvers when entering into a Development Agreement?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
2. DEVELOPMENT FEE.
2.1 Development Fee. You shall pay to us a "Development Fee" in the amount designated in Exhibit A immediately upon execution of this Agreement. The Development Fee is paid to us in consideration of the rights we grant you pursuant to this Agreement. Accordingly, the Development Fee is deemed fully earned by us upon execution of this Agreement and is nonrefundable, even if you fail to develop one or more of the Businesses.
Source: Item 5 — Initial Fees (FDD pages 11–13)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the Development Fee is due immediately upon the execution of the Development Agreement. The amount of the Development Fee is designated in Exhibit A of the agreement. This fee is compensation for the rights Kitchen Solvers grants to the franchisee under the Development Agreement.
Importantly, Kitchen Solvers considers the Development Fee fully earned upon the execution of the agreement. This means that the fee is nonrefundable, even if the franchisee fails to develop one or more of the Businesses as planned. This is a standard practice in franchising, as the fee compensates the franchisor for the initial work involved in setting up the development agreement and reserving the territory.
However, there is an exception for franchisees in Illinois. According to the addendum to the Area Development Agreement for the state of Illinois, the collection of any development fees will be deferred until Kitchen Solvers has satisfied their pre-opening obligations to the franchisee and the franchisee has commenced business operations. This deferral requirement was imposed by the Illinois Attorney General's Office due to Kitchen Solvers' financial condition. Therefore, prospective Kitchen Solvers franchisees in Illinois should be aware of this specific condition that modifies the standard payment terms.