In Michigan, under what conditions is Bojangles required to compensate a franchisee for inventory, supplies, equipment, fixtures, and furnishings if the franchise is not renewed?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor elects to lease, Franchisee shall lease the land and building to Franchisor on Franchisor's then-standard lease form for Bojangles restaurant sites operated by Franchisor, and Franchisor shall purchase the equipment, inventory and supplies at their depreciated net tangible book value, as defined above.
Net annual rental payments (payable monthly after taxes and expenses) shall be equal to the higher of fourteen percent (14%) of the depreciated net tangible book value, as defined above, of the land and Restaurant building, or six and one-half percent (6½%) of Gross Sales to the extent that Gross Sales do not exceed the amount of Gross Sales for the twelve (12) months preceding the commencement of occupancy by Franchisor, and five percent (5%) of Gross Sales that exceed that amount.
- (3) Franchisor shall exercise its right to purchase the Franchised Business by the later of sixty (60) days after the date of termination, the date it takes possession of the Restaurant pursuant to Paragraph XIV.E. hereof, or ten (10) days after the date upon which any litigation contesting the validity of the termination is finally adjudicated.
If Franchisor has taken possession of the Restaurant, it shall exercise its right to purchase the Restaurant or vacate the premises by the end of the foregoing period.
- E.
In order to maintain continuous operation of the Restaurant and to promote the best interests of the System, in the event this Agreement is terminated, Franc
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to the 2025 Bojangles Franchise Disclosure Document, the document does not specify the conditions under which Bojangles is required to compensate a franchisee in Michigan for inventory, supplies, equipment, fixtures, and furnishings if the franchise is not renewed. The FDD does mention that if the Franchise Agreement expires (without renewal) or is terminated or not renewed, the franchisee is obligated to de-identify the premises as a Bojangles restaurant at its sole cost and expense.
However, the FDD does state that in the event the Franchise Agreement is terminated, Bojangles has the option to purchase the Franchised Business. If Bojangles elects to purchase, they will buy the equipment, inventory, and supplies at their depreciated net tangible book value.
A prospective franchisee should seek clarification from Bojangles regarding the specific policies and procedures related to compensation for inventory, supplies, equipment, fixtures, and furnishings in the event of non-renewal, particularly within the state of Michigan. Understanding these terms is crucial for assessing the potential financial implications at the end of the franchise term.