Which sections of the Lees Famous Recipe Franchise Agreement outline the franchisee's fee obligations?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
ITEM 5: INITIAL FEES
Franchise Agreement
The initial fee for a single Lee's Famous Recipe Restaurant is $35,000 (the "Initial Franchise Fee"). The Initial Franchise Fee is paid to us in full when you sign the Franchise Agreement, is deemed fully earned by us upon receipt, and is not refundable under any circumstances. The Initial Franchise Fee is calculated and applied uniformly to all of our franchisees.
Area Development Agreement
If you sign an Area Development Agreement, you must pay us a nonrefundable development fee contemporaneously with the execution of the Area Development Agreement. The development fee is equal to the sum of 50% of the initial franchise fees due under the franchis
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 33–34)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, several sections within the Franchise Agreement outline the franchisee's fee obligations. Section 4(A) defines the "Initial Franchise Fee," which, according to Item 5, is $35,000 for a single restaurant. This fee is non-refundable and is due when signing the Franchise Agreement. Section 4(D) defines "Local Advertising Expenditures," indicating obligations related to local advertising. Section 4(F) defines the "Technology Fee," suggesting ongoing technology-related costs. Section 14(C)(6) refers to the "Transfer Fee," which is 50% of the then-current initial franchise fee applicable to new Lees Famous Recipe Restaurants. Section 15(E) defines the "Non-Compliance Fee".
Furthermore, Section 3 outlines the "Development Fee" for franchisees entering into an Area Development Agreement. This fee is equal to 50% of the initial franchise fees for each additional restaurant beyond the first, as detailed in Exhibit B. While the Development Fee is nonrefundable, a credit of $17,500 is applied against the Initial Franchise Fee for the second and subsequent restaurants developed under the Development Schedule, except for the initial Franchise Agreement. Section 16(A)(2) states that upon termination or expiration of the agreement, the franchisee must pay all outstanding Royalty Fees, Brand Cooperative Advertising Fund Fees, Local Advertising Expenditures, Regional Marketing Cooperative Contributions, Technology Fees, and accrued interest.
Prospective franchisees should carefully review these sections within the Franchise Agreement to fully understand their financial obligations to Lees Famous Recipe. Understanding the terms and conditions related to each fee, including when it is due and whether it is refundable, is crucial for financial planning. Additionally, franchisees should note the conditions under which these fees may change or be required, such as the transfer of ownership or termination of the agreement. It is also important to understand the obligations for future development, as outlined in Section 11, which requires franchisees to open restaurants according to the Development Schedule, regardless of increased investment requirements or financial conditions.