What was the net income adjustment required under the tax sharing agreement for Brueggers Bagels?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| \$ 55,963 | \$ | 57,740 | \$ | 52,351 |
CARIBOU COFFEE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share information)
| provisions | Shares | Amount | Capital | Interest | Loss | Earnings | Total | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Balance, December 28, 2021 | $ 27,144 | 21,125,385 | $ | 211 | $ 336,689 | $ | 3,286 | $ (3,462) | $ 95,478 | $ 459,346 |
| Net income Adjustments required under tax sharing agreement | 759 - | - - | - - | - 766 | 772 - | - - | 48,684 - | 50,215 766 | ||
| Stock based compensation expense | 7,465 | - | - | - | - | - | - | 7,465 | ||
| Accrued interest on shareholder note receivable | (43) | - | - | - | - | - | - | (43) | ||
| Unrealized gain on derivative securities, net of income tax | 12 | - | - | - | - | 805 | - | 817 | ||
| Reclassification of loss on cash flow hedge, net of tax benefit | 35 | - | - | - | - | 2,340 | - | 2,375 | ||
| Settlement of PNC derivative securities and novation of BNP and | ||||||||||
| Rabo derivative securities | 158 | - | - | 355 | - | 317 | - | 830 | ||
| Distribution of non-controlling interest | - | - | - | - | (1,145) | - | - | (1,145) | ||
| Changes in noncontrolling interest from: | ||||||||||
| Distributions (repurchases), including | ||||||||||
| repayments on shareholder notes receivable | (3,623) | - | - | (324) | - | - | - | (3,947) | ||
| Contributions (share issuances), net of shareholder notes | ||||||||||
| receivable | 1,031 | - | - | - | - | - | - | 1,031 | ||
| Fair value remeasurements | 25,614 | - | - | (25,614) | - | - | - | - | ||
| Balance, December 27, 2022 | $ 58,552 | 21,125,385 | $ | 211 | $ 311,872 | $ | 2,913 | $ - | $ 144,162 | $ 517,710 |
| Net income | 840 | - | - | - | 960 | - | 57,740 | 59,540 | ||
| Adjustments required under tax sharing | - | 830 | 830 | |||||||
| agreement | ||||||||||
| Stock based compensation expense | 9,790 | - | - | - | - | - | - | 9,790 | ||
| Accrued interest on shareholder note receivable | (58) | - | - | - | - | - | - | (58) | ||
| PBI equity contribution | - | 189,626 | 2 | 18,796 | - | - | - | 18,798 | ||
| Dividend | (302) | - | - | (18,472) | - | - | - | (18,774) | ||
| Distribution of noncontrolling interest | - | - | - | - | (929) | - | - | (929) | ||
| Changes in noncontrolling interest from: | ||||||||||
| Distributions (repurchases), including | ||||||||||
| repayments on shareholder notes receivable | (15,673) | - | - | - | - | - | - | (15,673) | ||
| Contributions (share issuances), net of shareholder notes | ||||||||||
| receivable | 1,277 | - | - | - | - | - | - | 1,277 | ||
| Fair value remeasurements | 2,644 | - | - | (2,644) | - | - | - | - | ||
| Balance, December 26, 2023 | 57,070 | 21,315,011 | 213 | 310,382 | 2,944 | - | 201,902 | 572,511 | ||
| Net income | 823 | - | - | - | 909 | - | 55,963 | 57,695 | ||
| Divestiture of Roastery Operations | 1,378 | - | - | 95,017 | - | - | - | 96,395 | ||
| Adjustments required under tax sharing | ||||||||||
| agreement | - | - | - | 971 | - | - | - | 971 | ||
| Stock based compensation expense | 13,023 | - | - | - | - | - | - | 13,023 | ||
| Accrued interest on shareholder note receivable | (188) | - | - | - | - | - | - | (188) | ||
| Distribution of noncontrolling interest | - | - | - | - | (931) | - | - | (931) | ||
| Changes in noncontrolling interest from: | (1,773) | - | - | - | - | - | - | (1,773) | ||
| Distributions (repurchases), including | ||||||||||
| repayments on shareholder notes receivable | ||||||||||
| Contributions (share issuances), net of shareholder notes | ||||||||||
| receivable | 1,002 | - | - | - | - | - | - | 1,002 | ||
| Cancellations of outstanding shares | (11,690) | - | - | - | - | - | - | (11,690) | ||
| Fair value remeasurements | (7,191) | - | - | 7,191 | - | - | - | - | ||
| Balance, December 31, 2024 | 52,454 | 21,315,011 | 213 | 413,561 | 2,922 | - | 257,865 | 727,015 |
CARIBOU COFFEE COMPANY, INC.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, there were net income adjustments required under the tax sharing agreement in multiple years. For the year ending December 28, 2021, the adjustment was $48,684. For the year ending December 27, 2022, the adjustment was $830. For the year ending December 31, 2024, the adjustment was $971.
These adjustments stem from Brueggers Bagels filing a federal consolidated income tax return with Panera Brands, Inc. and Subsidiaries. A Tax Matters Agreement governs the allocation, settlement, and administrative aspects of this consolidated group. As of December 31, 2024, Brueggers Bagels had a net related party payable of $46.8 million recorded for tax benefits or cash payments used from 2016 to 2023 and estimated 2024 consolidated tax filings.
Additionally, as of December 31, 2024, there was a $6.2 million difference between the amount Brueggers Bagels received under the tax matters agreement and the expected settlement amount, which is recorded as an additional investment by PBI. This complex tax structure means that a prospective franchisee needs to understand how these tax arrangements could impact the financial performance of their specific Brueggers Bagels franchise and should seek professional financial advice.