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BAB, Inc.
BAB, Inc. franchises bagel and muffin shops and sells baked goods and coffee to its franchisees and customers.
BAB, Inc. is a small franchisor of bagel and muffin shops. It does not bake the bagels itself or run most of the stores. Instead, it sells the right to use its brand and business system to independent shop owners, who pay fees for that privilege.
The company's money comes from two main places. One is the franchise arrangement itself: people who open a shop pay for the right to use the name and system, and they keep paying ongoing fees as long as they operate. The other is selling product — baked goods and coffee — to those franchisees and to consumers. So BAB sits in the middle of a chain: it supplies the brand, the recipes and the goods, and the franchisees do the day-to-day work of running shops and serving customers. This is a capital-light business. BAB does not need to buy or lease hundreds of storefronts, hire armies of counter staff, or absorb the cost of a bad location, because the franchisees carry that risk. In exchange, BAB gives up most of the upside of a wildly successful shop. Its job is to keep the brand appealing enough that people want to buy in, and to keep the supply of baked goods and coffee flowing so franchisees stay happy.
The flip side is that a franchisor lives or dies by its franchisees' health. If shops struggle or close, the fee stream shrinks and there is no store-level profit to fall back on. BAB is a tiny player in a crowded breakfast-and-coffee market dominated by far larger chains, which makes scale, brand recognition and franchisee support the things that matter most. It is a small, simple, royalty-and-supply business — not a big restaurant operator — and it should be judged that way.
Saved answer · last researched 14 Nov 2026
BIG PICTURE
About 60 shops pay royalties to a company with no restaurants of its own
- 60% Franchised bagel and muffin shops paying royalties
- 40% All other US bagel and bakery shops
BAB owns the Big Apple Bagels and My Favorite Muffin names, but it runs no stores itself. Roughly 60 franchised shops, plus a handful of licensed ones mostly in the Midwest and West, send it royalties on what they sell. That stream is the whole business, which is why a 21% operating margin on $3.44 million of 2025 revenue goes straight back to owners as dividends. Source: AInvest, data from 2025
Timeline
Two Founders and a Bagel Shop
In late 1992, BAB Systems, Inc. was incorporated to sell franchises for Big Apple Bagels, a chain of specialty bagel shops. The idea was simple: instead of building and running stores itself, the company would sell other people the right to open a Big Apple Bagels under its name. The first shop opened shortly after.
Brewster's Coffee Comes Along
A few years in, the company added its own coffee brand, Brewster's, and poured it into both the bagel shops and the muffin shops it was now running. It was a smart bit of bundling: a bagel shop that sells coffee makes more money from the same customer.
Big Apple Buys My Favorite Muffin
In 1997 the company bought My Favorite Muffin and folded it into BAB Systems. Now it had a second baked-good brand to franchise alongside the bagels, giving it more ways to grow without building anything itself.
Jacobs Bros. Bagels Assets Bought
Two years later, the company picked up the assets of Jacobs Bros. Bagels. The brand's main job would be wholesale: driving bagel sales beyond the shops.
BAB Goes Public
That same year, in 1999, the company became publicly traded, eventually landing on the OTC market under the ticker BABB. Going public gave it a way to raise money and a public scorecard for how the franchise business was doing.
A New Delaware Home
A year later the company was reincorporated under Delaware law. In plain terms, it was tidying up its legal structure as a public company, a housekeeping move rather than a change in what it sold.
Ten Countries in the Middle East
In 2014, a Dubai-based organization signed a Master Franchise Agreement covering ten Middle East countries. Under that deal, the franchisee would open Big Apple Bagels shops across the region, and the first one opened in late 2015. It was the company's bagel brand stepping onto a much bigger stage.
Selling the Stores, Keeping the Royalties
Then came the real turn. The company shifted from running its own stores to an almost entirely franchised system. It now made money from royalties on sales at shops other people owned and ran. That meant steady income without the costs and headaches of running restaurants, and it became the core of the business.
A Leadership Shuffle
In 2025, Michael Murtaugh, the company's vice president, general counsel and a director, retired for health reasons. Brian Evans stepped up as chief operating officer and corporate secretary, and CFO Geraldine Conn joined the board. Michael Evans stayed on as president and CEO.
Small, Steady, and Paying Cash Back
By fiscal 2025 the company was a small, mature royalty stream: about 60 franchised shops and no company-owned stores, with revenue dipping to roughly $3.4 million while cost cuts lifted net income to about $560,000. It paid a small quarterly dividend. Management's pitch was simple: this is a low-growth business that turns its cash over to shareholders.