When does Nothing Bundt Cakes recognize extension fee income?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
The fees payable hereunder are fully earned by us when we and you sign this Rider
and not refundable under any circumstances, even if you do not comply or attempt to comply with the Schedule and we then terminate this Rider. However, each time you (or your Approved Affiliate) sign a franchise agreement for another Nothing Bundt Cakes® Bakery to be developed within the Development Area, we will apply the deposit related to that Bakery toward the initial franchise fee due for that Bakery.
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Nothing Bundt Cakes collects fees related to a development rider. Specifically, upon execution of the rider, the franchisee must pay (a) the $45,000 initial franchise fee for the first franchise agreement, and (b) deposits for additional bakeries they commit to develop. These deposits equal 50% of the $45,000 initial franchise fee for each additional bakery. The balance of the initial franchise fee is due when the franchise agreement for that bakery is signed.
According to the 2025 FDD, Nothing Bundt Cakes earns these fees immediately upon signing the rider. The document states, "The fees payable hereunder are fully earned by us when we and you sign this Rider and not refundable under any circumstances..." This means that Nothing Bundt Cakes recognizes the income from these fees as soon as both parties sign the development rider agreement.
This policy has significant implications for prospective franchisees. Even if the franchisee fails to meet the development schedule or the rider is terminated, the fees are non-refundable. However, the deposit related to each bakery will be applied toward the initial franchise fee when a franchise agreement is signed for that bakery. Therefore, a prospective franchisee should carefully consider their ability to meet the development schedule before signing the rider, as the fees are immediately earned by Nothing Bundt Cakes and are non-refundable.