For Brueggers Bagels, who are considered the 'Guarantors' in relation to the Development Agreement?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, partnership, or limited liability company, the owner(s) of Franchisee identified on Exhibit A to this Agreement must execute our standard form of Guaranty.
BACKGROUND
- A. We and our affiliates (being any person or entity that directly or indirectly owns or controls us or that is directly or indirectly owned or controlled by us or is under common control with us), through significant expenditures of time, skill and money have developed a proprietary system relating to the preparation and promotion of distinctive bagels, baked goods and cream cheese and the establishment and operation of restaurants specializing in the sale of the bagels, baked goods, cream cheese, sandwiches, soups, salads, and other food and beverage items (the "System").
- B. The distinguishing characteristics of the System include bagels and cream cheese products prepared in accordance with secret and proprietary recipes and manufacturing processes owned by us and our affiliates; distinctive exterior and interior Bakery design, décor, color scheme, fixtures, and furnishings; standards and specifications for ingredients, food preparation, equipment, supplies, and Bakery operations, as well as uniform standards, specifications, methods, policies and procedures for Bakery operations, proprietary inventory and management control, training and assistance; and advertising and promotional programs; all of which may be changed, improved, and further developed by us and our affiliates from time to time.
- C. Through our dedicated operations, marketing methods, and merchandising policies, we have developed the reputation, public image and goodwill of the System in the United States and established a firm foundation for our franchised and corporate owned Bakery operations consisting of the highest standards of training, management, supervision, appearance, services and quality of products.
- D. We identify the System and the restaurants operating under it ("Bakeries") by means of the marks "Bruegger's" and "Bruegger's Bagels" and such other trade names, service marks, trademarks, logos, emblems, and indicia of origin as we may hereafter designate for use in connection with the System (the "Proprietary Marks").
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to the 2025 FDD, if a Brueggers Bagels franchisee is a corporation, partnership, or limited liability company, the owners identified on Exhibit A of the Development Agreement must execute the standard form of Guaranty. This means that individuals with ownership stakes in the franchisee entity are personally guaranteeing the franchisee's obligations under the Development Agreement. Additionally, if a guarantor resides in a community property state, their spouse may also be required to execute the Guaranty.
The Guaranty remains in effect for Brueggers Bagels until the Development Agreement terminates or expires. However, the obligations of the guarantors for events that occurred before the termination date will remain in effect until they are fulfilled. Even after the death of a guarantor, their estate will be responsible for obligations existing at the time of death, while the surviving guarantors continue to be fully responsible.
This requirement ensures that Brueggers Bagels has recourse to the personal assets of the franchisee's owners, not just the business assets of the franchisee entity, in case of default or breach of contract. This is a common practice in franchising to provide the franchisor with added security and to ensure the franchisee owners are fully committed to the business. The inclusion of a spouse in community property states further strengthens this guarantee, reflecting the joint financial interests in those jurisdictions.
Prospective Brueggers Bagels franchisees should carefully review Exhibit A of the Development Agreement to understand who the franchisor considers to be the owners required to provide a personal guarantee. They should also be aware of the implications of signing a Guaranty, including the potential impact on their personal assets and the assets of their estate. It is advisable to seek legal counsel to fully understand the terms and conditions of the Guaranty before signing the Development Agreement.