What are the two options for determining the purchase price of the Big Apple Bagels store?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
cessary (in function or quality) to the Store's operation or that Franchisor has not approved as meeting its standards for BAGELS Stores, and the purchase price will reflect these exclusions.Franchisor shall have the unrestricted right to assign this option to purchase and assignment of leases separate and apart from the remainder of this Agreement.
- ii. The purchase price for the BAGELS Store (except for the signage, the purchase price of which is $100) shall be either, at Franchisor's option: (a) the Book Value (as defined below) of the Purchased Assets, or (b) the Forced Liquidation Value of the Purchased Assets, as determined by a neutral appraiser. 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.
iii. For purposes of this Paragraph 17.f., "Useful Life" shall be as follows:
Furniture, fixtures, signs: 7 years
Equipment (including electronic equipment): 5 years
Leasehold improvements: 10 years
- iv.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, if the franchise agreement expires without renewal, or is terminated by either the franchisor or franchisee (without cause), Big Apple Bagels has the option to purchase the tangible assets of the store. The purchase price for the Big Apple Bagels store, excluding signage (which is valued at $100), will be determined by Big Apple Bagels using one of two methods.
The first option is the Book Value of the Purchased Assets. Book Value is defined as the net book value of the purchased assets, based on the store's last monthly balance sheet submitted to Big Apple Bagels. Each depreciable asset is valued as if it had been depreciated on a straight-line basis from the date of acquisition over its useful life, without considering salvage value. The FDD specifies the useful life for furniture, fixtures, and signs as 7 years; for equipment (including electronic equipment) as 5 years; and for leasehold improvements as 10 years.
The second option is the Forced Liquidation Value of the Purchased Assets, as determined by a neutral appraiser. In this process, both Big Apple Bagels and the franchisee will each select an appraiser. These two appraisers will then select a third, neutral appraiser, who will ultimately determine the Forced Liquidation Value. The fees and costs of the neutral appraiser will be shared equally between Big Apple Bagels and the franchisee. Big Apple Bagels has the right to exclude any items that do not meet their standards or are not reasonably necessary for the store's operation, and the purchase price will reflect these exclusions.