How is the Book Value of the Purchased Assets of a Big Apple Bagels store defined?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
The fees and costs of the neutral appraiser shall be shared equally by Franchisor and Franchisee. "Book Value" shall mean the net book value of the Purchased Assets, as disclosed by the balance sheet of the last monthly statement of the BAGELS Store required to have been submitted to Franchisor pursuant to Paragraph 11.b. hereof prior to such termination or expiration, provided, however, that: (1) each depreciable asset shall be valued as if it had been depreciated on a "straight-line" basis from the date of its acquisition over its Useful Life (defined below) without provision for salvage value; and (2) Franchisor may exclude from the Purchased Assets
any inventory, equipment, fixtures, furniture, signs, POS Systems, fax machines, computers, or leasehold improvements of the BAGELS Store that have not been acquired in compliance with this Agreement. No value shall be attributed to goodwill of the BAGELS Store, the assignment of lease (or sublease) for the premises of the BAGELS Store, or the assignment of any lease for any other tangible assets used in connection with the BAGELS Store, and Franchisor shall not be required to pay any separate consideration for any such assignment or sublease.
iii. For purposes of this Paragraph 17.f., "Useful Life" shall be as follows:
Furniture, fixtures, signs: 7 years
Equipment (including electronic equipment): 5 years
Leasehold improvements: 10 years
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the "Book Value" of purchased assets is defined as the net book value of the assets disclosed on the last monthly balance sheet submitted by the franchisee to Big Apple Bagels before termination or expiration of the franchise agreement. This valuation, however, is subject to specific adjustments.
For depreciation, each depreciable asset is valued as if it had been depreciated on a straight-line basis from its acquisition date over its 'Useful Life,' without considering any salvage value. The 'Useful Life' for furniture, fixtures, and signs is seven years; for equipment (including electronic equipment), it is five years; and for leasehold improvements, it is ten years.
Big Apple Bagels has the right to exclude certain items from the purchased assets if they were not acquired in compliance with the franchise agreement. Furthermore, no value is attributed to the goodwill of the Big Apple Bagels store, the assignment of the lease (or sublease) for the premises, or the assignment of any lease for other tangible assets used in connection with the store. Big Apple Bagels is not required to provide separate consideration for such assignments or subleases. If the franchisee hasn't provided a balance sheet, Big Apple Bagels can estimate the Book Value based on the franchisee's initial cost, depreciated on a straight-line basis. If the initial cost isn't proven with receipts, Big Apple Bagels will estimate the cost based on their best information for similar items at the time the franchise opened.