Under what circumstances is the Initial Franchise Fee for a Lees Famous Recipe Restaurant refundable?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
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 franchise agreements for each additional Restaurant (beyond your first Restaurant) that you agree to develop under the Development Schedule (the "Development Fee"). We require a commitment of at least two Restaurants to enter into an Area Development Agreement. For example, if you agree to develop three Lee's Famous Recipe Restaurants, then your Development Fee would equal $35,000 (50% of the initial franchise fee for the second and third Restaurant).
The Development Fee is to be paid in addition to the Initial Franchise Fee for the first Lee's Famous Recipe Restaurant to be developed. You will also be required to pay the then-current Initial Franchise Fee for each additional Lee's Famous Recipe Restaurant when you sign each subsequent Franchise Agreement. We will credit a portion of the Development Fee ($17,500) against the then-current Initial Franchise Fee for the second and each subsequent franchise agreement until the Development Fee is exhausted. The Development Fee is calculated and applied uniformly to all of our franchisees.
The Development Fee is paid to us in full when you sign the Area Development Agreement, is deemed fully earned by us upon receipt, and is not refundable under any circumstances.
In 2008, LFR Inc. offered all then-existing Lee's Famous Recipe franchisees the option to terminate their existing franchise agreements and enter into replacement license agreements for the continued use of the Lee's Famous Recipe® Marks and System.
Source: Item 5 — INITIAL FEES (FDD pages 14–15)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, the initial franchise fee is generally not refundable. The standard initial franchise fee for a single Lees Famous Recipe restaurant is $35,000. This fee is paid when the Franchise Agreement is signed. Once Lees Famous Recipe receives the $35,000, it is deemed fully earned and is non-refundable under any circumstances. This policy is applied uniformly to all franchisees.
Similarly, the development fee associated with an Area Development Agreement is also non-refundable. This fee is equal to 50% of the initial franchise fees for each additional restaurant beyond the first that the franchisee commits to developing under the Development Schedule. For example, if a franchisee agrees to develop three Lees Famous Recipe restaurants, the Development Fee would be $35,000 (50% of the initial franchise fee for the second and third restaurants). This fee is paid when the Area Development Agreement is signed and is also deemed fully earned upon receipt, with no possibility of a refund.
Other fees, such as the training fee of $5,000 for up to four attendees and funds collected for the Restaurant Opening Campaign Requirement, are also non-refundable. The Restaurant Opening Campaign Requirement involves spending a minimum of $10,000 during the first 90 days after opening, and if Lees Famous Recipe collects these funds directly, they are not refundable.