What increases the balances owed to the Company from Inc related to Big Apple Bagels?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
,800, $14,600 and $19,200, respectively.
A License Agreement between the Company and Inc for the Company's use of the BAB trademark owned by Inc commenced on December 1, 2003 for a term of 10 years with automatic renewals for a five-year period until the Company notifies Inc in writing 120 days prior to renewal that it wishes to terminate the Agreement. The Agreement was automatically renewed through December 1, 2023. The Company is to pay Inc a license fee of 28% on the first $3,000,000 of revenue earned by the Company for each fiscal year and 50% for any revenue in excess of $3,000,000. All revenues are subject to a license fee. The expense in connection with this License Agreement to the Company for 2024, 2023 and 2022 was $603,400, $572,200, and $540,600, respectively.
The balances owed to the Company by Operations and Inc. are considered contra-equity accounts because funds in Operations and Inc are limited.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the balances owed to the Company from Inc. are increased by allocations. The balances owed to the Company by Operations and Inc. are considered contra-equity accounts because funds in Operations and Inc are limited.
As of November 30, 2024, Inc. owed the Company $5,036,900, and as of November 30, 2023, Inc. owed the company $5,021,600. Amounts owed the Company from Inc are reduced by the license fee expenses, rent expense allocated from BAB, Inc. for its office space, and funds received by Inc and transferred to the Company from nontraditional license fees.
This means that a Big Apple Bagels franchisee should be aware that the financial relationship between the Company and Inc. can fluctuate based on several factors, including expense allocations, license fees, and nontraditional income. Understanding these factors is important for assessing the financial stability and practices of the franchisor.