Under what circumstances does Bojangles have the right to purchase a franchised business after termination?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
anagers fail to timely attend and successfully complete the initial training program or any other training programs required by Franchisor.
- D. In the event that this Agreement is terminated on account of Franchisee's default, Franchisor shall have the option, within sixty (60) days after the date of termination (or longer if the provisions of Paragraph XIV.D.(3) are applicable), to purchase or lease the Franchised Business subject to the following terms and subject to the terms of the Development Agreement entered into between Franchisee and Franchisor:
- (1) If Franchisee leases the Restaurant building and land on which the Restaurant is situated, Franchisor shall have the right to purchase the leasehold and other assets owned by Franchisee relating to the Restaurant for an amount equal to the higher of (i) the net tangible book value (which shall be the cost of the Restaurant building, land and equipment reduced by accumulated depreciation, utilizing the straight-line method of depreciation using a useful life of 5 years for all equipment, 7 years for seating and decor, 10 years for signs, paving and HVAC and 20 years for the building and other improvements) of the assets owned by Franchisee relating to the Restaurant, including the leasehold improvements, equipment, inventory and supplies, and excluding unamortized franchise and development fees, good will and all other intangible assets; or (ii) an amount calculated as follows:
$\mathbf{C}$ В If Gross Sales for the Multiply the Gross Sales by: and subtract the following from the product of A and B: Restaurant for the 12 months immediately preceding termination are: up to $750,000 $.40 All debts and liabilities of $750,001--$900,000 Franchisee to Franchisor, or $.50 $.55 to third parties (excluding $900.001 or more lease obligations to third parties) which are being assumed by Franchisor.
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.
- If Franchisee owns the land on which the Restaurant to be purchased by (2) Franchisor is situated, Franchisor shall have the right, at its discretion, either to purchase or lease the land and Restaurant building.
Source: Item 23 — RECEIPTS (FDD pages 82–573)
What This Means (2025 FDD)
According to Bojangles' 2025 Franchise Disclosure Document, Bojangles has the option to purchase or lease a franchised business if the Franchise Agreement is terminated due to the franchisee's default. This option is available to Bojangles for a period of sixty days after the termination date, potentially longer under specific conditions outlined in Paragraph XV.D.(3) of the agreement.
Bojangles' right to purchase the franchise is contingent on the terms of the Franchise Agreement and any Development Agreement between the franchisee and Bojangles. If the franchisee leases the restaurant building and land, Bojangles has the right to purchase the leasehold and other related assets. The purchase price will be the higher of either the net tangible book value of the assets (excluding intangible assets like goodwill and franchise fees) or an amount calculated according to a specific table detailed in Paragraph XV.D.(1).
The net tangible book value is calculated by depreciating the cost of the restaurant building, land, and equipment using the straight-line method. The useful life for depreciation is defined as 5 years for equipment, 7 years for seating and decor, 10 years for signs, paving, and HVAC, and 20 years for the building and other improvements. This valuation method provides a standardized approach to determining the asset value in case of a purchase after termination.
If Bojangles chooses to lease the property, the franchisee is obligated to lease the land and building to Bojangles using Bojangles' standard lease form for company-operated locations. In this scenario, Bojangles will purchase the equipment, inventory, and supplies at their depreciated net tangible book value. The net annual rental payments will be the higher of 14% of the depreciated net tangible book value of the land and building, or a percentage of gross sales: 6.5% of gross sales up to the amount of gross sales for the 12 months preceding Bojangles' occupancy, and 5% of gross sales exceeding that amount.
Bojangles will exercise its right to purchase the franchised business within sixty days after the termination date, the date it takes possession of the restaurant, or ten days after any litigation contesting the termination's validity is resolved, whichever is later. If Bojangles takes possession of the restaurant, it must decide whether to purchase the restaurant or vacate the premises by the end of this period.