Bab, Inc. (OTC: BABB)

BAB, Inc. franchises and licenses quick service bakery cafe concepts, primarily under the My Favorite Muffin and Brewster's brands. As of May 31 2025 the company had 61 franchised units and 4 licensed units in operation. The corporate office employs 11 full time and 1 part time staff responsible for management, accounting, advertising, and franchising functions. None of the employees are covered by collective bargaining agreements and management describes employee relations as good. The franchised and licensed units prepare and serve baked goods, coffee, and related menu items to consumers in their local markets. BAB, Inc. maintains a centralized support system that provides training, marketing, and supply chain assistance to its franchise partners.

BAB, Inc. generates revenue primarily through ongoing royalties that amount to 5% of net retail and wholesale sales reported by its franchisees. The royalty is calculated on an accrual basis using actual reports received from franchisees, with estimates applied when reports are pending. Initial franchise fees are collected when new units are opened or when existing units are transferred to new operators. Licensing fees arise from the sale of BAB branded products, which include coffee, cream cheese, muffin mix, and frozen bagels supplied by a third party commercial bakery. The company also earns revenue from the distribution of licensed products such as My Favorite Muffin mix and Brewster's coffee to franchised and licensed locations. Additional income is generated through nontraditional channels of distribution, which may include alternative retail placements or promotional items. Marketing fund revenue is recognized at the same time as marketing fund expenses are incurred, so the two offset each other and have no impact on net income. For the 6 months ended May 31 2025, system wide revenues totaled $20.0 million, reflecting the combined sales of the franchised and licensed network.

• no_segments_reported.

Within the competitive bakery cafe franchise sector, BAB, Inc. occupies a niche focused on muffin centric and coffee offering concepts. It faces competition from larger national chains such as Dunkin’ and Starbucks, as well as regional bakery franchises and independent cafés. The company’s competitive advantages include its established brand recognition, a proven franchise support system, and a reliable supply chain for its proprietary BAB branded products. These advantages help BAB, Inc. maintain franchisee satisfaction and support the opening of new units in selected markets. However, the business is subject to risks such as the ability to attract new franchisees, the continued success of existing franchisees, and the effects of competition on unit performance. Additional factors that can influence results include fluctuations in development and operating costs, changes in consumer acceptance of new product offerings, and variations in food, labor and employee benefit costs. Regional economic conditions, weather patterns, and shifts in government regulation, including minimum wage adjustments, also affect the franchise network.

BAB, Inc. serves 2 primary customer groups: franchisees and licensed operators who run the bakery cafe units, and the end consumer patrons who purchase food and beverages at those locations. The franchised and licensed units are independent businesses that pay royalties and fees to BAB, Inc. for the use of its brand, systems, and support services. In addition to serving the retail public, the company sells its BAB branded products and licensed goods to wholesale distributors that supply the franchised and licensed stores. No specific customer names are disclosed in the filing, but the customer base consists of individual entrepreneurs, small business operators, and households seeking bakery cafe offerings. The company’s focus on muffin centric and coffee offering concepts helps it attract consumers who prefer quick service breakfast and snack options.