Under what condition will Big Apple Bagels refund all but $3,000 of the franchise fee deposit?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Expenditure | Estimated Amount or Estimated High-Low Range | Method of Payment | When Due | To Whom Paid | |
|---|---|---|---|---|---|
| Initial Franchise Fee (1,2) | $25,000 | Lump Sum less Franchise Fee Deposit paid | When you sign the Franchise Agreement | BAB | |
| Store Opening Marketing Fee(3) | $7,500 | Lump Sum | Upon signing Franchise Agreement | BAB (BAGELS Marketing Fund) | |
| Professional Fees(4) | $5,000 - $10,000 | As Agreed | As incurred | Professionals | |
| First Month's Rent and Security | $4,000 - $9,000 | As agreed in | As agreed in lease | Lessor | |
| Deposit(5) | lease | ||||
| Insurance(6) | $5,000-$9,000 | Lump Sum | As incurred | Insurance Company | |
| Leasehold Improvements(7) | $170,000 - $292,000 | As agreed | As incurred | Suppliers | |
| Exterior and Interior Signage | $6,000 - $12,000 | As agreed | As incurred | Designated | |
| and Display (8) | Supplier | ||||
| Furniture, Fixtures, Equipment | $226,000 - $270,000 | As agreed | As incurred | Approved | |
| (9) | Suppliers | ||||
| Training(10) | $2,000 - $5,000 | As incurred | Before Opening | Hotels; Transportation Lines; Car; Restaurants | |
| Prepaid Expenses, Deposits(11) | $500 - $1,500 | Lump Sum | As incurred | Third Parties | |
| Opening Inventory, Supplies(12) | $15,000-$23,000 | As agreed | As incurred | Approved Suppliers | |
| Additional Funds - 3 months(13) | $12,000 - $18,000 | Varies | As incurred | Third Parties | |
| TOTALS | $478,000-$685,000 | Except for the Franchise Fee Deposit, the payments in the table above are non-refundable. The refundability of the Franchise Fee Deposit under the Preliminary Agreement is as follows: If you submit at least 1 site to BAB within the 60 days, but the site is not approved, BAB will refund all but $3,000 of the deposit. If you fail to submit even 1 site to BAB within the 60 days, you will not be entitled to a refund of any of the deposit. If you locate a site and sign a Franchise Agreement, the $10,000 deposit will be applied toward the initial franchise fee. If you locate a site and it is approved by BAB within the 60 days but you fail to sign a Franchise Agreement within 14 days of the approval, BAB may terminate the Preliminary Agreement and you will not b |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 26–34)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, a prospective franchisee may be entitled to a partial refund of their franchise fee deposit under specific conditions outlined in the Preliminary Agreement. If the franchisee submits at least one site to Big Apple Bagels for approval within 60 days, but the submitted site is not approved by the company, Big Apple Bagels will refund all but $3,000 of the initial deposit. This implies that $3,000 of the deposit is non-refundable and may be used to cover administrative or evaluation costs incurred by Big Apple Bagels during the site selection process.
However, the FDD also states that if the franchisee fails to submit even a single site for consideration within the specified 60-day timeframe, they will not be entitled to any refund of the deposit. This condition underscores the importance of actively engaging in the site selection process promptly after entering into the Preliminary Agreement. The deposit is $10,000, which is applied toward the initial franchise fee if a site is located and a Franchise Agreement is signed.
Furthermore, if a site is approved by Big Apple Bagels within the 60-day period, but the franchisee fails to sign a Franchise Agreement within 14 days of the approval, Big Apple Bagels reserves the right to terminate the Preliminary Agreement, and the franchisee will forfeit the entire $10,000 deposit. This clause highlights the need for franchisees to be prepared to move forward swiftly with the Franchise Agreement once a suitable location has been identified and approved. These stipulations regarding the refundability of the franchise fee deposit are crucial for potential franchisees to understand, as they directly impact the financial risk associated with entering into a Preliminary Agreement with Big Apple Bagels.