Bab Systems,inc Franchise Cost, Revenue & Review 2026
Analysis by FranchiseVerdict Research · Methodology
FranchiseVerdict summary · 2026
A Bab Systems,inc franchise requires a total initial investment of $298K – $748K, including a $20K – $30K franchise fee and an ongoing 5.0% royalty[2]. Per the latest FDD, average unit revenue was $1.2M[2]. SBA 7(a) loans show a 26.7% charge-off rate across 16 loans[1]. FranchiseVerdict grade: C (Average), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified
Overview
- Investment
- $298K – $748K
- 19th pct Service Resta…
- Avg gross sales
- $1.2M
- 13th pct Service Resta…
- Royalty
- 5.0%
- 7th pct Service Resta…
- Units
- 12
- 22nd pct Service Resta…
- SBA charge-off
- 26.7%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Full-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Full-Service Restaurants avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- Total investment $298K – $748K including a $30K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $1.2M/year.
- Verdict C (Average), verdict score 40/100 (higher is better). SBA loan charge-off rate of 26.7% across 16 loans (well above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- No protected territory and the franchisor reserves the right to compete in your area. Clarify territorial boundaries before signing.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- BAB Systems, Inc.
- Parent company
- BAB, Inc.
- CEO title
- President, Chief Executive Officer and Director
- Michael W. Evans
- Incorporated in
- Illinois
- HQ
- 500 Lake Cook Road, Suite 475, Deerfield, Illinois 60015
- Auditor
- Sassetti LLC
- Audited financials
- Franchisor revenue
- $3.3M
- vs $3.3M prior year
Overview
About
Franchisor of "My Favorite Muffin" retail bakery cafe stores selling muffins, coffee, bagels, cream cheese spreads, breakfast/lunch sandwiches, and soft drinks under two store formats (Gourmet Muffin Bakery and Your All Day Bakery Cafe)
- CEO
- Michael W. Evans
- Headquarters
- Illinois
- Founded
- 1992
- States available
- 6
Can you afford it, and what does the money buy?
Entry cost runs 44% below the typical full-service restaurants franchise.
Source: FDD · Items 5–7
FDD Item 7
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $30K | $30K |
| Working capital (3–6 mo) | $6K | $18K |
| Equipment, build-out, other | $262K | $700K |
| Total initial investment | $298K | $748K |
Source: Bab Systems,inc FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $298K – $748K
- Top 40% of category vs category
- Liquid capital req'd
- $6K – $18K
- Top 40% of category vs category
- Franchise fee
- $20K – $30K
- Top 40% of category vs category
- Royalty
- 5.0%
- percentage · typical 6–8%
- Ad fund
- 3.0%
- typical 3–5%
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 3.0% of gross sales |
| Technology fee | $95 |
| Transfer fee | $5K |
| Renewal fee | $3K |
What do units actually make?
Average unit sales run 23% below the full-service restaurants norm.
Source: FDD · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$118K
10.0% margin
Unlevered ROIC
22%
EBITDA / total invested capital
Payback
4.5 yrs
cash-on-cash, unlevered
Financial Performance
- Avg gross sales
- $1.2M
- Per unit/yr · from the Item 19 franchised-cohort breakdown (no single system-wide average disclosed)
- Median gross sales
- N/A
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross_sales_quartiles
- Sample size
- 12 units
- vs category median 16
- Range (low → high)
- $250K→$1.4M
- Cohort dispersion (min → max)
- Quartile band
- $393K→$1.2M
- Bottom 25% → top 25%
- Reporting year
- 2026
- Fiscal year the figures cover
Compared against 1273 Full-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $1.2M/year in gross sales. Revenue-to-investment ratio: 2.2x.
Fee burden
5.0% royalty + 3.0% ad fund.
Operator retention
System contracting at -7.7% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Full-Service Restaurants averages
How Bab Systems,inc Compares
Is the system healthy?
Source: FDD · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 12
- Opened
- 0
- Last reporting year
- Closed
- 1
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 0.0%
- Company-owned
- 0
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (3-yr)
- -7.7%
- Net unit change over 3 years
- 3-yr CAGR
- -7.7%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 0
- Closed (3yr)
- 0
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 0
- Reacquired (3yr)
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 12 · 6 states reported
The Territory Map
FDD Item 12 reports the state count, but the specific list isn't in our current data. The map will appear once we re-extract from the FDD or enough franchisee contacts are available.
6
states with franchisees (per FDD Item 12)
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 16
- Loan volume
- $4.1M
- Median loan
- $239K
- 50th percentile
- Charge-off rate
- 26.7%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 73.3%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 12
- Defaults
- 4
- Typical loan rate
- 5.4%
- avg rate to borrowers
- vs industry
- N/A
- NAICS 7222
- Jobs supported
- 177
- 4.3 per loan
- Lender concentration
- 19%
- top lender's share
Borrower mix: 0% went to startups / new businesses, 100% to established operators
Vintage analysis
Bab Systems,inc charge-off rate by loan vintage
Top lenders financing Bab Systems,inc franchisees
Showing 3 of 12 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
A 26.7% charge-off rate means roughly 1 in 4 franchisees failed to repay their SBA loan. Investigate what changed.
What could kill this investment?
SBA loans charge off at 26.7% — 66% above the 16.0% national norm, i.e. higher lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Litigation (Item 3)
No litigation disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Sassetti LLC
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
What are you signing up for?
Ongoing fees run about 8.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 2 |
| Territory type | none |
| Protected territory | No |
| Exclusive territoryℹ | No |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 10 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Mandatory arbitration | Yes |
| Arbitration location | Chicago, Illinois (major city nearest BAB's principal office) |
| Governing law | Illinois |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 30 hrs
- On-the-job training
- 63 hrs
- Training location
- BAB's corporate offices in Deerfield, Illinois, or via telecommunication platform (Zoom), plus on-site at designated training Store
- Ongoing training
- Required
- Time to open
- 12 mo
- From signing to launch
- Site selection
- franchisee locates; BAB approves
- Franchisor financing
- Not offered
- Item 10
- POS system
- MicroSale
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: MicroSale
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Bab Systems,inc franchise?
The total investment to open a Bab Systems,inc franchise ranges from $298K – $748K, with an initial franchise fee of $30K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Bab Systems,inc franchise owners earn?
According to Item 19 of the Bab Systems,inc FDD, the average gross sales per unit is $1.2M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Bab Systems,inc's franchise failure rate?
Based on SBA 7(a) loan data, Bab Systems,inc has a charge-off rate of 26.7% across 16 loans, meaning 26.7% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Bab Systems,inc franchise locations are there?
As of their most recent FDD filing, Bab Systems,inc has 12 total units in the United States, including 12 franchised units and 0 company-owned units.
Is Bab Systems,inc a good franchise to buy?
FranchiseVerdict rates Bab Systems,inc as a C-grade franchise with a verdict score of 40 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
If you represent Bab Systems,inc, you can request corrections or provide updated information.
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.