What constitutes insolvency for a Brueggers Bagels franchisee that would trigger automatic termination?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
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 (unless supersedeas bond is filed); if your company is dissolved; if execution is levied against your business or property; if a suit to foreclose any lien or mortgage against you, the Premises or equipment of the Bakery is instituted and not dismissed within thirty (30) days or if you enter into any agreement that is in lieu of such foreclosure; or if the real or personal property of the Bakery is sold after levy thereupon by any sheriff, marshal, or constable.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, there are several conditions related to insolvency or financial distress that would trigger an automatic termination of the franchise agreement without notice. These include becoming insolvent, making a general assignment for the benefit of creditors, filing a bankruptcy petition (or not opposing one filed against you), or being adjudicated bankrupt or insolvent. These conditions indicate a severe inability to meet financial obligations, signaling high risk to the Brueggers Bagels system.
Further automatic termination events include the filing of a bill in equity for the appointment of a receiver or custodian consented to by the franchisee, the appointment of a receiver or custodian for the franchisee's assets, or the institution of proceedings for composition with creditors. Additionally, a final judgment against the franchisee remaining unsatisfied for 30 days or longer (unless a supersedeas bond is filed), the dissolution of the franchisee's company, or the levy of execution against the franchisee's business or property also constitute grounds for automatic termination. These scenarios suggest a critical breakdown in the franchisee's financial and legal standing.
Finally, the franchise agreement will be automatically terminated if a suit to foreclose any lien or mortgage against you, the Premises or equipment of the Bakery is instituted and not dismissed within thirty (30) days or if you enter into any agreement that is in lieu of such foreclosure; or if the real or personal property of the Bakery is sold after levy thereupon by any sheriff, marshal, or constable. These conditions highlight the importance of maintaining financial stability and adhering to legal and contractual obligations to avoid losing the Brueggers Bagels franchise.