What constitutes a material default regarding the opening of a Brueggers Bagels bakery?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
the benefit of creditors; if a petition in bankruptcy is filed by you or 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 is instituted and not dismissed within thirty (30) days or if you enter into any agreement that is in lieu of such foreclosure; is sold after levy thereupon by any sheriff, marshal, or constable.
- 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.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, a franchisee can be in material default of their franchise agreement with no opportunity to cure the default under certain conditions. One such condition is the failure to satisfy the Development Schedule as described in Section 1.3 of the agreement. This means that if a franchisee does not meet the deadlines and requirements for opening their Brueggers Bagels bakery as outlined in the development schedule, Brueggers Bagels can terminate the agreement immediately.
Another condition that constitutes material default is if the franchisee ceases to operate or abandons the bakery, loses the right to possession of the premises, or forfeits the right to do business in the jurisdiction where the bakery is located. However, there is an exception: if the premises are damaged or destroyed through no fault of the franchisee, and repairs or reconstruction cannot be completed within 60 days, the franchisee has 30 days to apply for approval to relocate or reconstruct the bakery, which approval will not be unreasonably withheld. This provides some protection for franchisees in cases of unforeseen disasters.
Additionally, a material default can occur if the franchisee and/or their personnel fail to complete all required training under Section 7.1 to Brueggers Bagels's satisfaction prior to the opening of the Bakery. This highlights the importance of completing the training program to the franchisor's standards before commencing operations. These stipulations are in place to ensure that Brueggers Bagels franchisees adhere to the brand's standards and operational requirements, and to protect the brand's reputation and goodwill.