In the event that Bojangles elects to purchase property after termination due to franchisee default, what rights does Bojangles have regarding amounts owed by the franchisee?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
The amount as computed above shall be payable twenty percent (20%) on closing with the principal balance payable in three (3) equal payments due annually on the anniversary of the purchase with interest on the unpaid principal balance payable on the due date of each principal
payment at the rate of ten percent (10%) per annum. Undisclosed or matured contingent liabilities which are paid by Franchisor after payment of the twenty percent (20%) down shall be deducted from the next installment(s) due, together with interest thereon from the date paid at the rate of two percent (2%) per annum over the prime rate of Bank of America on the date such payment is made.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to the 2025 FDD, if Bojangles purchases a restaurant from a franchisee after termination due to default, the amount is computed with 20% payable on closing. The principal balance is then payable in three equal annual installments, with interest of 10% per annum on the unpaid principal balance, payable on the due date of each principal payment.
Furthermore, if Bojangles pays any undisclosed or matured contingent liabilities after the initial 20% down payment, these amounts, along with interest calculated at 2% above the Bank of America prime rate on the date of payment, will be deducted from the next installment(s) due. This clause protects Bojangles from assuming unknown financial burdens related to the restaurant's prior operation by the franchisee.
This arrangement provides a structured payment plan for Bojangles while also safeguarding its interests against potential hidden liabilities. For a prospective franchisee, this highlights the importance of maintaining transparent and sound financial practices to avoid potential defaults and the subsequent financial implications upon termination and repurchase by Bojangles.