What are the consequences if a Brueggers Bagels franchisee fails to comply with the restrictions on competition as outlined in Section 11.1?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.1.2. Divert or attempt to divert any present or prospective business or customer to any Competing Business by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks and the System.
- 11.2. After Expiration, Termination, or Transfer. You agree that, except pursuant to Franchise Agreements with us or our affiliates, or as we otherwise approve in writing, you will not, for one (1) year after the expiration or termination of this Agreement or the approved transfer of this Agreement to a new developer or the transfer to a Franchisee as may be permitted hereunder, either directly or indirectly, for yourself or through, on behalf of, or in conjunction with any person or legal entity, own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in any Competing Business which is, or is intended to be, located within the Development Area.
11.3. Enforcement.
- 11.3.1. We have the right, in our sole discretion, to reduce the scope of any restriction in Sections 11.1 and 11.2 by giving you written notice.
- 11.3.2. You agree that the existence of any claims you may have against us, whether or not arising from this Agreement, will not constitute a defense to our enforcement of this Section 11.
- 11.3.3. You acknowledge that your violation of the terms of this Section 11 would result in irreparable injury to us for which no adequate remedy at law may be available, and you accordingly consent to the issuance of an injunction prohibiting any conduct by you in violation of the terms of this Section 11. Injunctive relief will be in addition to any other remedies we may have.
- 11.3.4. If you or any other person bound by this Section 11 fails or refuses to abide by any of the foregoing restrictions on competition, and we obtain enforcement in a judicial or arbitration proceeding, the obligations under the breached restriction will continue in effect for a period ending one (1) year after the date the person begins to comply with the order enforcing the restriction.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to the 2025 Brueggers Bagels Franchise Disclosure Document, if a franchisee fails to comply with the restrictions on competition as outlined in Section 11.1, Brueggers Bagels has several avenues for recourse. Specifically, Section 11.1 outlines restrictions on a franchisee's ability to engage in any 'Competing Business' during the term of the agreement. A 'Competing Business' is defined as any entity open for breakfast, lunch, and dinner that primarily sells pastries, baked goods, and made-to-order café items like sandwiches, salads, soups, and desserts, explicitly mentioning concepts such as Panera Bread and Einstein Bros. Bagels.
Specifically, Brueggers Bagels can seek an injunction to stop the franchisee from violating the terms of Section 11. This means a court order could force the franchisee to cease any competitive activities. The FDD states that a violation of Section 11 would result in irreparable injury to Brueggers Bagels, justifying injunctive relief. Moreover, this injunctive relief is in addition to any other remedies Brueggers Bagels might pursue.
Furthermore, if Brueggers Bagels pursues enforcement through a judicial or arbitration proceeding and is successful, the franchisee's obligations under the breached restriction will be extended. The restrictions will remain in effect for one year after the date the franchisee begins to comply with the enforcement order. Additionally, failure to comply with the restrictions on competition in Section 11.1 is also grounds for termination of the franchise agreement.
In practical terms, this means a Brueggers Bagels franchisee must be extremely careful to avoid any competitive business activities during the term of their agreement and even for a period after the agreement's expiration or termination, as defined in Section 11.2. Violating these restrictions could lead to legal action, an enforced cessation of competitive activities, an extension of the non-compete obligations, and potential termination of the franchise agreement.