BAM Franchising, Inc. - 2026 FDD

The Special Risks section explicitly states that the franchisor's financial condition "calls into question" its ability to provide services and support. This is a mandatory disclosure and directly reinforces the balance-sheet concern in the audited financials.

"Bricks & Minifigs" has been on the supplemental register since 2012. The FDD says supplemental registration provides more limited protections and that a challenged user may be forced to switch brands. Principal-register applications were filed in July 2023 and remain pending.

Total liabilities of $6.69M exceed total assets of $6.07M. The deficit worsened from ($182K) in 2022 to ($621K) in 2025, and the company has not shown positive equity in the history presented.

As of Dec. 31, 2025, 70 franchise agreements had been signed but not yet opened, with 83 projected new locations in 2026. The FDD flags this as a special risk and the deferred franchise revenue on the balance sheet magnifies the refund-risk if openings do not happen.

Royalties are 6% of gross revenue or $500 per month minimum, whichever is greater. The brand fund adds 1%, local marketing requires 3%, and a technology fund of up to 1% may be added. The FDD warns that inability to make the payments may result in termination.

Arbitration, mediation, and litigation are all required in Utah County, Utah under Utah law. For out-of-state buyers, that can raise the cost of any dispute and may reduce leverage in settlement discussions.

After the franchise ends, a former franchisee cannot compete within 25 miles of any company-owned or franchised location for 3 years. The agreement also restricts online e-commerce activity anywhere in the world for 3 years.

The transfer fee cited in earlier materials was $5,000. The 2026 FDD lists a $30,000 transfer fee, plus a mandatory $10,000 training fee for the transferee and possible broker referral costs.

Earlier materials listed an investment range of $108,500 to $276,400. The 2026 FDD now discloses $303,500 to $597,500, more than doubling the high end and materially changing the capital required to enter the system.

The FDD says some former franchisees signed mutual termination and release agreements that prohibit disparagement. That does not block diligence entirely, but it can reduce the candor of reference conversations.

The 4th quartile of 39 stores averaged $293,524 in 2025 revenue. With royalties, marketing, occupancy, staffing, and COGS, that level of revenue looks tight and may sit near breakeven or below it.

Item 19 gross margin tables cover only 104 of 153 qualifying stores because some locations did not report reliably. That leaves prospective franchise purchasers with an incomplete profitability picture.

BAM entered into an Assurance of Discontinuance in 2019 over franchise no-poach provisions. The Washington Attorney General’s investigation found that BAM Franchising’s franchise agreements contained restrictive language that prevented individual store owners from soliciting or hiring workers from competing or neighboring Bricks & Minifigs franchises. Resolution: Under the AOD, BAM Franchising agreed to cease utilizing and enforcing these restrictive employment provisions across its network and to remove the no-poach language from all of its standard franchise agreements.

Item 13 says BAM is not obligated under the franchise agreement to protect marks or defend franchisees against infringement claims. The company says it intends to do so as a matter of policy, but that is discretionary.