Can Big Apple Bagels withhold approval of a proposed site for a franchise?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
i. The location of Franchisee's Store must be approved by Franchisor. Franchisee may operate the Store only at the location specified in Paragraph 1.a. and Rider A to this Agreement and may not relocate the Store except with Franchisor's prior written consent. If the site for the Store has not been located by Franchisee at the time of execution of this Agreement, Franchisee agrees to locate and submit to Franchisor for approval, within ninety (90) days after the date of execution of this Agreement, a site suitable for the operation of a BAGELS Store and acceptable to Franchisor. Franchisee must use a licensed real estate broker who specializes in commercial real estate. Franchisee must locate the site for his Store and provide written detailed site information to Franchisor as Franchisor prescribes. Franchisor shall assist Franchisee in the selection of the site. Franchisor has the right to withhold its approval of a site.
- ii. Franchisee shall submit the lease for the premises of the Store to Franchisor prior to its execution for Franchisor's examination and approval. The lease for the premises of the Store shall state that the premises shall be used only for a BAGELS Store and contain substantially the following provisions:
"Anything contained in this lease to the contrary notwithstanding, Lessor agrees that, without its consent, this lease and the right, title and interest of the Lessee thereunder, may be assigned by the Lessee to BAB Systems, Inc., an Illinois Corporation, or its designee, provided that said BAB Systems, Inc. or its designee shall execute such documents evidencing its agreement to thereafter keep and perform, or cause to be kept or performed, all of the obligations of the Lessee arising under this lease from and after the time of such assignment."
"Lessor agrees that Lessor shall, upon written request of BAB Systems, Inc., disclose to said corporation, all reports, information or data in Lessor's possession with respect to sales made in, upon or from the leased premises."
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, Big Apple Bagels has the right to withhold approval of a proposed site for a franchise. The franchisee is responsible for locating a site suitable for a Big Apple Bagels store and acceptable to Big Apple Bagels within 90 days of the franchise agreement. The franchisee must use a licensed real estate broker specializing in commercial real estate and provide detailed site information to Big Apple Bagels as prescribed. Big Apple Bagels will assist the franchisee in the site selection process.
This means that while the franchisee is responsible for finding potential locations, Big Apple Bagels retains ultimate control over site selection. A prospective franchisee might spend considerable time and resources identifying a location, only to have it rejected by Big Apple Bagels. This could potentially delay the opening of the store and impact the franchisee's initial investment and revenue projections.
Furthermore, the franchisee must submit the lease for the store premises to Big Apple Bagels for examination and approval before execution. The lease must stipulate that the premises will be used only for a Big Apple Bagels store and include provisions allowing assignment of the lease to BAB Systems, Inc. or its designee without the lessor's consent. This gives Big Apple Bagels significant control over the lease terms and ensures the location is solely dedicated to the Big Apple Bagels business. The lessor must also agree to disclose sales information to BAB Systems, Inc. upon request.
Prospective franchisees should carefully consider the implications of Big Apple Bagels' site approval process and lease requirements. It is crucial to understand the criteria Big Apple Bagels uses to evaluate potential locations and to factor in the possibility of delays or rejections when planning their investment and business operations. Engaging with current franchisees and seeking clarification from Big Apple Bagels on their site selection process can provide valuable insights and help mitigate potential risks.