What was the license fee paid by Big Apple Bagels in 2023?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
ncome tax expense was 21.7% for the federal rate and a state rate of 7.4%, which is net of the federal tax effect.
In fiscal 2022 the Company's effective tax rate including permanent differences used to compute income tax expense was 21.0% for the federal rate and a state rate of 7.1%, which is net of the federal tax effect.
Note 8 – Related Party and Affiliate Transactions
Allocations for payroll and certain overhead expenses are charged from the Company to Inc and Operations. The allocation percentages are determined annually by management. Allocations from the Company to Inc for November 2024, 2023 and 2022 were $548,200, $577,900 and $584,900, respectively. Allocations to Operations for November 2024, 2023 and 2022 were $
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to the 2025 Big Apple Bagels Franchise Disclosure Document, the company paid a license fee of $572,200 to Inc. in 2023. This fee is for the use of the Big Apple Bagels trademark, which is owned by Inc. The license agreement between Big Apple Bagels and Inc. commenced on December 1, 2003, and was automatically renewed through December 1, 2023.
The agreement stipulates that Big Apple Bagels pays Inc. a license fee of 28% on the first $3,000,000 of revenue earned by the company each fiscal year, and 50% for any revenue exceeding $3,000,000. All revenues are subject to this license fee.
This related party transaction is important for prospective franchisees to understand, as it represents a significant expense for Big Apple Bagels. Franchisees should consider how this expense might impact the financial performance and stability of the franchisor, and by extension, the support and services they can expect to receive. Understanding the details of this agreement and its potential impact on the franchise system is a crucial part of due diligence.