What expenses does Big Apple Bagels use the $3,000 withheld from the deposit to cover?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
ed by PROSPECTIVE FRANCHISEE. Unless PROSPECTIVE FRANCHISEE withdraws his application for a Franchise as hereinafter provided, PROSPECTIVE FRANCHISEE agrees that within fourteen (14) days of approval by BAB of a site for PROSPECTIVE FRANCHISEE's BAGELS Store, PROSPECTIVE FRANCHISEE will execute BAB's Franchise Agreement, in the form delivered to PROSPECTIVE FRANCHISEE. In the event PROSPECTIVE FRANCHISEE fails to execute BAB's Franchise Agreement within said fourteen (14) days, BAB may, at its sole option, terminate this Preliminary Agreement, in which event PROSPECTIVE FRANCHISEE shall not be entitled to any refund of the Deposit.
- a. PROSPECTIVE FRANCHISEE may withdraw his application for a Franchise and terminate this Preliminary Agreement by a written notice of termination delivered to BAB at any time prior to the submission by PROSPECTIVE FRANCHISEE of a proposed site and the approval by BAB of said site. Upon termination prior to the approval by BAB of a site, BAB shall refund PROSPECTIVE FRANCHISEE's Deposit less Three Thousand ($3,000.00) Dollars.
- b.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, if a prospective franchisee withdraws their application before Big Apple Bagels approves a site, Big Apple Bagels will refund the deposit less $3,000. This $3,000 is not a penalty, but rather is intended to compensate Big Apple Bagels for expenses they have already incurred while considering the application.
The FDD specifies that the $3,000 covers expenses related to the potential franchisee's proposed purchase of a Big Apple Bagels franchise. These expenses include research, demographic data, preliminary layouts, and inspection of potential sites for the franchisee's store.
Additionally, the $3,000 can be used to cover travel and living expenses incurred by Big Apple Bagels representatives, compensation for Big Apple Bagels employees involved in the application process, and legal fees and expenses. This means that even if a franchise agreement is not ultimately signed, the prospective franchisee may be responsible for covering these costs incurred by Big Apple Bagels during the evaluation process.