What is the California Department of Financial Protection and Innovation's determination regarding Brueggers Bagels' capitalization?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
The California Department of Financial Protection and Innovation has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 23 — RECEIPTS (FDD pages 61–335)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, the California Department of Financial Protection and Innovation has concerns regarding the company's capitalization. Specifically, the Department has determined that Brueggers Bagels has not adequately demonstrated that it is sufficiently capitalized and/or that it must rely on franchise fees to fund its operations.
As a result of this determination, the Commissioner has imposed a fee deferral condition for California franchisees. This condition mandates that Brueggers Bagels must defer the collection of all initial franchise fees from franchisees in California. The deferral lasts until Brueggers Bagels has fulfilled all of its pre-opening obligations to the franchisee and the franchisee's Brueggers Bagels location is open for business.
For California franchisees who enter into a development agreement with Brueggers Bagels, the payment of development and initial franchise fees associated with each specific unit in the development schedule is also deferred. This deferral continues until that particular unit is open and operating. This condition is designed to protect franchisees in California, ensuring that they are not paying fees to Brueggers Bagels before the company has fulfilled its obligations to help them get their business up and running.