Are the Development Fee and Initial Franchise Fees paid to Big Apple Bagels refundable?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 7: ESTIMATED INITIAL INVESTMENT]
Except for the Franchise Fee Deposit, the payments in the table above are non-refundable. The refundability of the Franchise Fee Deposit under the Preliminary Agreement is as follows: If you submit at least 1 site to BAB within the 60 days, but the site is not approved, BAB will refund all but $3,000 of the deposit. If you fail to submit even 1 site to BAB within the 60 days, you will not be entitled to a refund of any of the deposit. If you locate a site and sign a Franchise Agreement, the $10,000 deposit will be applied toward the initial franchise fee. If you locate a site and it is approved by BAB within the 60 days but you fail to sign a Franchise Agreement within 14 days of the approval, BAB may terminate the Preliminary Agreement and you will not be entitled to any refund of the $10,000 deposit.
Neither BAB nor any affiliate finances part of the initial investment.
NOTES:
(1, 2) Initial Franchise Fee. The initial franchise fee is $25,000. If you enter into a Preliminary Agreement, you must pay BAB a deposit in the amount of $10,000. If you ultimately sign a Franchise Agreement, you must pay BAB the balance of the applicable initial franchise fee at the time you sign the Franchise Agreement. You must sign the Franchise Agreement within 14 days after we approve your site, or we may terminate the Preliminary Agreement. See Item 5 concerning the refund of your deposit. The $25,000 is for your first Franchise Agreement; if you sign more than 1 Franchise Agreement, the franchise fee is $20,000 for your 2nd and subsequent BAGELS Production Stores.
If you are a Developer, for each subsequent store developed under an Area Development Agreement, the franchise fee is $15,000 for your 2nd and subsequent BAGELS Production Stores.
[Item 7: ESTIMATED INITIAL INVESTMENT]
None of the payments in the above table are refundable.
Neither BAB nor any affiliate finances part of the initial investment.
NOTES:
(1) Development Fee.
Developer must pay a Development Fee calculated by multiplying the aggregate Minimum Development Quota by $5,000. The estimates shown are based on the Minimum Development Quota from 2 to 10 Stores.
(2) Initial Franchise Fees.
For the first BAGELS Production Store, Developer will pay a franchise fee of $25,000. For subsequent BAGELS Production Stores, the franchise fee will be $15,000. For BAGELS Satellite Stores the franchise fee will be $10,000.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 26–34)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the Development Fee and Initial Franchise Fees are generally non-refundable. For a standard franchise agreement, a deposit of $10,000 is required under a Preliminary Agreement. This deposit is partially refundable if at least one site is submitted to Big Apple Bagels within 60 days but is not approved; in this case, all but $3,000 of the deposit will be refunded. However, if no site is submitted within 60 days, the entire deposit is non-refundable. If a site is approved, and a Franchise Agreement is not signed within 14 days of approval, Big Apple Bagels may terminate the Preliminary Agreement, and no refund will be given. If a franchise agreement is signed, the $10,000 deposit will be applied towards the initial franchise fee.
For developers entering into an Area Development Agreement, the FDD states that none of the payments, including the Development Fee and Initial Franchise Fees, are refundable. The Development Fee is calculated by multiplying the Minimum Development Quota by $5,000. The initial franchise fee for the first BAGELS Production Store is $25,000, and $15,000 for subsequent BAGELS Production Stores. For BAGELS Satellite Stores, the franchise fee is $10,000.
Prospective franchisees should carefully consider these refund policies and ensure they understand the conditions under which a refund may or may not be available. This is a standard practice in franchising, as initial fees compensate the franchisor for their time and resources in evaluating and setting up a new franchisee. It is advisable to seek legal and financial counsel to fully understand the implications of these non-refundable fees before entering into any agreement with Big Apple Bagels.