How is the Forced Liquidation Value of the Big Apple Bagels store determined?

According to Big Apple Bagels' 2025 Franchise Disclosure Document, the determination of the Forced Liquidation Value involves both the franchisor and franchisee. If the franchise agreement expires without renewal, or is terminated either by Big Apple Bagels according to its provisions, or by the franchisee without cause, Big Apple Bagels has the option to purchase the tangible assets of the store. These assets include inventory, equipment, fixtures, furniture, signs, POS systems, fax machines, computers, and leasehold improvements.

To determine the Forced Liquidation Value, both Big Apple Bagels and the franchisee will each select an appraiser. The selected appraisers then choose a third, neutral appraiser. This neutral appraiser is responsible for determining the Forced Liquidation Value of the Purchased Assets. The fees and costs associated with the neutral appraiser are shared equally between Big Apple Bagels and the franchisee.

This process ensures a presumably fair valuation of the assets in the event of a buy-out, as a neutral third party determines the liquidation value. It is important for prospective franchisees to understand this process, as it dictates the potential compensation they receive for their assets should Big Apple Bagels exercise its option to purchase the store upon termination or expiration of the franchise agreement.