Does Big Apple Bagels have an option to purchase a franchisee's Big Apple Bagels business upon termination or expiration?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Provision in Franchise Agreement (unless otherwise specified) | Summary |
|---|---|---|
| a. Length of the franchise | Paragraph 2.a. | 10 years |
| term | ||
| b .Renewal or extension of | Paragraph 2.b. | If you are in good standing, you can renew on the then current terms |
| the term | ||
| c. Requirements for Franchisee to renew or extend | Paragraph 2.b. | Pay renewal fee of $2,500, maintain premises or secure substitute premises, remodel, sign new agreement and other documents and sign release, and agree to upgrade to then-current standards of decor, equipment, and product offerings. The renewal agreement may contain materially different terms and conditions than your original contract, but the royalty fee will not be greater than the royalty fee that we then impose on similarly-situated renewing franchisees |
| d. Termination by | Section 15 | Breach by BAB, you in compliance. Additionally, you may terminate |
| Franchisee | the agreement under any grounds permitted by law. | |
| e. Termination by | Not Applicable | BAB cannot terminate your Franchise Agreement without cause |
| Franchisor without cause | ||
| f. Termination by | Section 16 | BAB can terminate only if you commit any 1 of several listed |
| Franchisor with cause | violations | |
| g. "Cause" defined – curable faults | Section 16 | You have 10 days for monetary defaults and failure to maintain required insurance, and 30 days for all defaults not listed in Paragraph 16.a. |
| h. "Cause" defined – non- curable defaults | Section 16 | Failure to submit site within 90 days, failure to open Store in 4 months of possession, failure to complete initial training, abandonment, conviction of felony, unauthorized transfers, unauthorized use or disclosure of confidential information or BAGELS Operations Manual, unauthorized use of Marks, creation of a threat to public health or safety, repeated defaults (even if cured), unapproved transfer upon your death or permanent incapacity, failure to comply with covenants in Paragraph 9.f; termination of other agreement between BAB and you. |
| i. Franchisee’s obligations on termination/ nonrenewal | Section 17 t | Franchise Agreement: Pay outstanding amounts, complete de- identification, return confidential information, covenant not to compete, continuing obligations, BAB option to purchase. |
| j. Assignment of contract | Paragraph 14.a. | No restrictions on BAB's right to assign |
| by Franchisor | ||
| k. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 69–75)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, Big Apple Bagels does have the option to purchase a franchisee's business upon termination or expiration of the franchise agreement. Specifically, Big Apple Bagels has the option to purchase the tangible assets and assignment of all licenses and permits. The price for these items will be determined by a formula described in the Franchise Agreement.
This is a fairly standard clause in franchise agreements. It allows Big Apple Bagels to maintain control over the location and ensure a smooth transition, preventing a competitor from taking over the site immediately. For a franchisee, this means that upon termination or expiration, Big Apple Bagels may exercise its right to purchase the business, and the franchisee will be obligated to sell according to the formula price detailed in the agreement.
Prospective franchisees should carefully review the section of the Franchise Agreement that outlines the formula for determining the purchase price. Understanding this formula is crucial, as it will dictate the compensation a franchisee receives if Big Apple Bagels decides to exercise its purchase option. Franchisees should also consider negotiating this formula during the initial franchise agreement discussions to ensure it reflects a fair market value for their business assets.