Does Bojangles enter into derivative contracts for speculative or investment purposes?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company and its franchisees are subject to price risk related to material commodity costs. In the normal course of business, under procedures established by the Company's financial risk management framework, the Company may enter into derivative contracts to manage changes in material commodity prices in order to protect the gross margin of sales for the entire Bojangles' brand. The Company does not enter into derivative contracts for speculative or investment purposes. There were no derivatives held by the Company as of December 29, 2024 and December 31, 2023.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, Bojangles may enter into derivative contracts to manage changes in material commodity prices to protect the gross margin of sales for the entire Bojangles brand. However, Bojangles states explicitly that it does not enter into derivative contracts for speculative or investment purposes.
As of December 29, 2024, and December 31, 2023, Bojangles did not hold any derivatives. This indicates that while Bojangles has the option to use these financial instruments, it has not done so recently.
For a prospective franchisee, this policy suggests that Bojangles aims to stabilize its costs related to commodities, which could help maintain consistent pricing and profitability. The franchisee benefits from knowing that Bojangles is not engaging in risky financial activities like speculation, which could negatively impact the financial health of the company and, by extension, the franchisees.