Does the Big Apple Bagels agreement create a fiduciary relationship between the franchisor and franchisee?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
7. RELATIONSHIP OF THE PARTIES.
- a. Independent Contractors. It is understood and agreed by the parties that this Agreement does not create a fiduciary relationship between them, that Franchisor and Franchisee shall be independent contractors and that nothing in this Agreement is intended to make either party a general or special agent, legal representative, subsidiary, joint venturer, partner, employee or servant of the other for any purpose.
Franchisor and Franchisee are independent contractors and no training, assistance or supervision, which Franchisor may give or offer to Franchisee will defeat their relationship as independent contractors.
Franchisor will not be liable for damages to any person or property arising directly or indirectly out of the operation of the Franchised Business.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the franchise agreement explicitly states that it does not create a fiduciary relationship between the franchisor and franchisee. The agreement specifies that Big Apple Bagels and its franchisees are independent contractors. This means that neither party is considered an agent, legal representative, subsidiary, joint venturer, partner, employee, or servant of the other for any purpose.
This independent contractor relationship is further reinforced by the statement that any training, assistance, or supervision provided by Big Apple Bagels to the franchisee does not alter their status as independent contractors. Big Apple Bagels will not be held liable for damages to any person or property resulting from the operation of the franchised business.
This type of arrangement is typical in franchising, where franchisors and franchisees maintain distinct legal and financial responsibilities. Franchisees are responsible for the day-to-day operations of their business, while franchisors provide the brand, system, and support. The explicit negation of a fiduciary relationship clarifies that Big Apple Bagels does not have the same legal duties to franchisees that would exist in a fiduciary relationship, such as a duty of utmost good faith and loyalty.