What is the franchisee's obligation to provide to Big Apple Bagels regarding the balance sheet?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Both the Franchisor and the Franchisee shall select an appraiser, whose sole function would be to select a third, neutral appraiser, who would determine the Forced Liquidation Value of the Purchased Assets.
The fees and costs of the neutral appraiser shall be shared equally by Franchisor and Franchisee. "Book Value" shall mean the net book value of the Purchased Assets, as disclosed by the balance sheet of the last monthly statement of the BAGELS Store required to have been submitted to Franchisor pursuant to Paragraph 11.b. hereof prior to such termination or expiration, provided, however, that: (1) each depreciable asset shall be valued as if it had been depreciated on a "straight-line" basis from the date of its acquisition over its Useful Life (defined below) without provision for salvage value; and (2) Franchisor may exclude from the Purchased Assets
any inventory, equipment, fixtures, furniture, signs, POS Systems, fax machines, computers, or leasehold improvements of the BAGELS Store that have not been acquired in compliance with this Agreement. No value shall be attributed to goodwill of the BAGELS Store, the assignment of lease (or sublease) for the premises of the BAGELS Store, or the assignment of any lease for any other tangible assets used in connection with the BAGELS Store, and Franchisor shall not be required to pay any separate consideration for any such assignment or sublease.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the franchisee is obligated to submit a monthly balance sheet to Big Apple Bagels, as stated in Paragraph 11.b. This balance sheet is used to determine the "Book Value" of purchased assets in the event of termination or expiration of the franchise agreement. The "Book Value" is defined as the net book value of the purchased assets as disclosed by this balance sheet.
In calculating the Book Value, each depreciable asset is valued as if it had been depreciated on a "straight-line" basis from the date of its acquisition over its Useful Life, without considering any salvage value. Big Apple Bagels specifies the Useful Life for different types of assets: 7 years for furniture, fixtures, and signs; 5 years for equipment (including electronic equipment); and 10 years for leasehold improvements.
Big Apple Bagels retains the right to exclude from the Purchased Assets any inventory, equipment, fixtures, furniture, signs, POS Systems, fax machines, computers, or leasehold improvements that were not acquired in compliance with the franchise agreement. Furthermore, no value is attributed to the goodwill of the BAGELS Store, the assignment of the lease (or sublease) for the premises, or the assignment of any lease for other tangible assets used in connection with the BAGELS Store, and Big Apple Bagels is not required to pay any separate consideration for such assignments or subleases.