What actions by a Brueggers Bagels franchisee related to bankruptcy can lead to automatic termination?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.1. Automatic Termination Without Notice.
You will be deemed to be in default under this Agreement, and all rights granted to you herein will automatically terminate without notice to you, if you become insolvent or make a general assignment for the benefit of creditors; if you file a petition in bankruptcy or a petition is filed against you and not opposed by you; if you are adjudicated as bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver or other custodian for your business or assets is filed and consented to by you; if a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of competent jurisdiction; if proceedings for a composition with creditors under any state or federal law are instituted by or against you; if a final judgment against you remains unsatisfied or of record for thirty (30) days or longer (unles
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, certain financial and legal actions related to insolvency or bankruptcy will trigger an automatic termination of the franchise agreement without notice. This means Brueggers Bagels can immediately terminate the agreement if the franchisee engages in any of the listed activities.
Specifically, the agreement will automatically terminate if the franchisee becomes insolvent or makes a general assignment for the benefit of creditors. Further, filing a petition in bankruptcy, or having a petition filed against them that they do not oppose, also results in automatic termination. Adjudication as bankrupt or insolvent has the same effect. Similarly, if a franchisee consents to the filing of a bill in equity or other proceeding for the appointment of a receiver or custodian for their business or assets, or if a receiver is appointed by a court, the agreement is automatically terminated. Finally, instituting proceedings for composition with creditors under state or federal law also leads to automatic termination.
This clause is a significant risk for prospective Brueggers Bagels franchisees. It highlights the importance of maintaining financial stability and avoiding actions that could lead to insolvency or bankruptcy. Franchisees should be aware that even initiating certain legal proceedings related to debt management could result in the immediate loss of their franchise rights. This type of clause is relatively standard in franchise agreements, as franchisors need to protect their brand and system from the negative impacts of a franchisee's financial distress.