Can Big Apple Bagels exclude items from the purchased assets of the BAGELS Store?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
e) of the BAGELS Store (collectively, the "Purchased Assets") and to an assignment of Franchisee's lease for (a) the premises of the BAGELS Store (or, if an assignment is prohibited, a sublease for the full remaining term and on the same terms and conditions as Franchisee's lease) and (b) any other tangible assets used in connection with the BAGELS Store. Franchisor may exclude from the assets purchased any items that Franchisor determines are not reasonably necessary (in function or quality) to the Store's operation or that Franchisor has not approved as meeting its standards for BAGELS Stores, and the purchase price will reflect these exclusions.Franchisor shall have the unrestricted right to assign this option to purchase and assignment of leases separate and apart from the remainder of this Agreement.
- ii.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, Big Apple Bagels has the option to purchase the tangible assets of a BAGELS Store if the franchise agreement expires without renewal, is terminated by Big Apple Bagels, or is terminated by the franchisee without cause. These tangible assets, referred to as "Purchased Assets," include inventory, equipment, fixtures, furniture, signs, POS systems, fax machines, computers, and leasehold improvements. However, certain items are excluded from the Purchased Assets, such as the unamortized portion of the initial franchise fee, cash, goodwill, short-term investments, and accounts receivable.
Big Apple Bagels retains the right to exclude items from the assets purchased if it determines they are not reasonably necessary for the store's operation or do not meet the franchisor's standards for BAGELS Stores. The purchase price will be adjusted to reflect these exclusions. This provision allows Big Apple Bagels to avoid purchasing substandard or unnecessary equipment, ensuring that the store maintains a consistent level of quality and operational efficiency.
Furthermore, Big Apple Bagels may exclude any inventory, equipment, fixtures, furniture, signs, POS Systems, fax machines, computers, or leasehold improvements that were not acquired in compliance with the franchise agreement. This protects Big Apple Bagels from having to purchase assets that do not meet its standards or were acquired without its approval. The FDD also specifies that no value will be attributed to the goodwill of the BAGELS Store or the assignment of the lease for the premises, meaning Big Apple Bagels will not pay extra for these intangible assets.