In the context of supplier restrictions for Big Apple Bagels, what does the term 'supplier' include?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
You must purchase all your coffee, which is branded in your store as Brewster's, from our designated supplier. The term "supplier" in this disclosure document, when used in connection with our right to designate or approve suppliers from whom Franchisee must purchase products or services, includes not only the manufacturer, but also the distributor of those products or services. BAB, Inc. will derive revenue in the form of a license fee on your purchases of coffee from the designated source under a trademark licensing agreement between BAB, Inc., an affiliate of BAB, and the designated source. The license fee is a certain amount for each pound of coffee purchased by you from the designated source.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 35–38)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, the term 'supplier' is broadly defined in the context of purchasing requirements. When the document refers to Big Apple Bagels's right to designate or approve suppliers from whom franchisees must purchase products or services, the term encompasses both the manufacturer and the distributor of those products or services. This means that Big Apple Bagels can control not only who makes the products you buy, but also who you buy them from.
This definition has significant implications for a prospective Big Apple Bagels franchisee. It means franchisees must adhere to the approved supply chain established by Big Apple Bagels, ensuring consistency and quality control across all franchise locations. While this may limit a franchisee's ability to negotiate prices or source products independently, it also provides a level of assurance that the products meet Big Apple Bagels's standards.
Furthermore, Big Apple Bagels derives revenue in the form of license fees from franchisee purchases of certain items like coffee, cream cheese, and proprietary muffin mix from designated sources. This revenue is generated through trademark licensing agreements between BAB, Inc. (an affiliate of Big Apple Bagels) and the designated suppliers. The license fee is a specific amount for each pound of the product purchased by the franchisee. This arrangement highlights the importance of understanding the approved supplier network and the associated costs when evaluating the potential profitability of a Big Apple Bagels franchise.