If the Pearce Bespoke Development Agreement is terminated, will Pearce Bespoke retain the Development Fee?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
the number of Businesses specified in the development schedule in Exhibit A (the "Development Schedule"). This Agreement does not grant you any right to use the Marks (as defined in your Initial Franchise Agreement) or the System (as defined in your Initial Franchise Agreement). Rights to use the Marks and the System are granted only by the Franchise Agreements.
2. Fees
Upon execution of this Agreement, you must pay us a development fee in the amount specified in Exhibit A (the "Development Fee"), which is based on the initial franchise fee you must pay for each Mobile Franchise that you develop (the "Franchise Fee", which is also specified in Exhibit A).
Source: Item 23 — RECEIPTS (FDD pages 39–172)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke FDD, Pearce Bespoke retains the Development Fee upon termination of the Development Agreement. The Development Fee is considered fully earned when the Development Agreement is signed by both parties and is non-refundable. This applies even if the franchisee fails to comply with the Development Schedule outlined in the agreement.
This means that if a prospective Pearce Bespoke franchisee signs a Development Agreement and pays the Development Fee, they will not receive a refund of this fee if the agreement is later terminated, regardless of the reason for termination. This includes situations where the franchisee is unable to meet the milestones set out in the Development Schedule.
This policy is a significant financial consideration for potential Pearce Bespoke developers. It highlights the importance of carefully evaluating one's ability to meet the obligations of the Development Agreement before signing and paying the Development Fee. Franchisees should conduct thorough due diligence and assess their financial and operational capabilities to ensure they can fulfill the development schedule.
Many franchise systems have similar policies regarding development fees, as they are intended to compensate the franchisor for the time, resources, and lost opportunity associated with granting exclusive development rights. However, the specific terms and conditions can vary, so it is crucial for prospective franchisees to carefully review the FDD and Development Agreement and seek professional advice before making a decision.