What constitutes a 'Material Default' that leads to automatic termination of a Brueggers Bagels franchise agreement?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.2. Material Default With No Opportunity to Cure.
You shall be deemed to be in Material Default and we may, at our option, terminate this Agreement and all rights granted hereunder, without affording you any opportunity to cure the default, effective immediately upon receipt of notice of such termination from us to you, upon the occurrence of any of the following events:
9.2.1. There is a default under any Franchise Agreement for which there is no opportunity to cure;
9.2.2. Failure to satisfy the Development Schedule as described in Section 1.3 of this Agreement;
9.2.3. If you cease to operate or otherwise abandon a Bakery, lose the right to possession of the Premises, or forfeit the right to do or transact business in the jurisdiction where the Premises for a Bakery are located.
However, if, through no fault of your own, the Premises are damaged or destroyed by an event such that repairs or reconstruction cannot be completed within sixty (60) days thereafter, then you will have thirty (30) days after that event in which to apply for our approval to relocate and/or reconstruct the Bakery, which approval will not be unreasonably withheld;
9.2.4. If you, or any person or entity with an interest in you purports to transfer an interest other than in accordance with Section 8;
9.2.5. If you or if any entity, shareholder, member, partner, or other person controlling more than five percent (5%) of Developer's stock, membership interest or partnership interest, by act or omission, permits or commits tortious conduct or a violation of any applicable law, ordinance, rule or
governmental regulation (including, but not limited to, any applicable employment law (e.g., harassment, discrimination, retaliation, equal employment, treatment of disabled persons, child labor or wages and hour law)) constituting a felony, or constituting a misdemeanor, lesser criminal offense or a violation of law which in our sole judgment has, or is likely to have, an adverse effect upon the System, the Proprietary Marks, or the goodwill associated therewith;
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, a 'Material Default' that leads to the termination of the franchise agreement without an opportunity to cure includes several specific events. These events allow Brueggers Bagels to terminate the agreement immediately upon notice.
One such event is a default under any other franchise agreement with Brueggers Bagels where there is no opportunity to cure the default. Another is failing to meet the Development Schedule outlined in Section 1.3 of the agreement. Ceasing operations, abandoning the bakery, losing possession of the premises, or forfeiting the right to conduct business in the relevant jurisdiction also constitute material defaults. However, if the premises are damaged or destroyed through no fault of the franchisee and cannot be repaired within 60 days, the franchisee has 30 days to apply for approval to relocate or reconstruct the bakery, which Brueggers Bagels will not unreasonably withhold.
Further, attempting to transfer an interest in the franchise in a manner not compliant with Section 8 of the agreement is a material default. Finally, if the franchisee, or any person or entity with more than a 5% interest in the franchisee, commits tortious conduct or violates any applicable law that Brueggers Bagels deems has or is likely to have an adverse effect on the Brueggers Bagels system, proprietary marks, or associated goodwill, this also constitutes a material default leading to immediate termination.