What is the obligation of Big Apple Bagels franchisees regarding the purchase of coffee?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
You must purchase all your coffee, which is branded in your store as Brewster's, from our designated supplier. The term "supplier" in this disclosure document, when used in connection with our right to designate or approve suppliers from whom Franchisee must purchase products or services, includes not only the manufacturer, but also the distributor of those products or services. BAB, Inc. will derive revenue in the form of a license fee on your purchases of coffee from the designated source under a trademark licensing agreement between BAB, Inc., an affiliate of BAB, and the designated source. The license fee is a certain amount for each pound of coffee purchased by you from the designated source.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 35–38)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, franchisees must purchase all coffee, which is branded as Brewster's in the store, from a designated supplier. The term 'supplier' includes both the manufacturer and the distributor of the coffee. Big Apple Bagels, Inc. will receive revenue in the form of a license fee based on the franchisee's coffee purchases from the designated source, as part of a trademark licensing agreement between Big Apple Bagels, Inc. and the designated source. The license fee is a specific amount for each pound of coffee purchased.
This requirement ensures consistency in the coffee product offered at all Big Apple Bagels locations, as well as providing a revenue stream for Big Apple Bagels, Inc. based on franchisee purchases. It is a common practice in franchising to mandate the use of specific suppliers to maintain quality control and brand uniformity.
Prospective franchisees should consider the implications of this requirement on their operating costs and profit margins. The cost of coffee and the license fee paid to Big Apple Bagels, Inc. will directly impact the franchisee's expenses. Franchisees should inquire about the specific amount of the license fee per pound of coffee and the process for selecting and changing designated suppliers. Understanding these details is crucial for assessing the financial viability of a Big Apple Bagels franchise.