What discretion does the Brueggers Bagels franchisor have to make decisions that may affect the franchisee's interests?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding any contrary provisions contained in this Agreement, Franchisor and Franchisee acknowledge and agree that (a) this Agreement (and the relationship of the parties which arises from this Agreement) grants Franchisor the discretion to make decisions, take actions and/or refrain from taking actions not inconsistent with Franchisee's explicit rights and obligations hereunder that may affect favorably or adversely Franchisee's interests; (b) Franchisor shall use its business judgment in exercising such discretion based on its assessment of its own interests and balancing those interests against the interests of the owners of Bakeries generally (including Franchisor and its affiliates and other franchisees), and specifically without considering Franchisee's individual interests or the individual interests of any other particular franchisee; (c) Franchisor shall have no liability to Franchisee for the exercise of its discretion in this manner; and (d) even if Franchisor has numerous motives for a particular action or decision, so long as at least one motive is a reasonable business justification no trier of fact in any legal action shall substitute its judgment for Franchisor's judgment so exercised, and such action or decision shall not be subject to challenge for abuse of discretion**.
IF FRANCHISOR TAKES ANY ACTION OR CHOOSES NOT TO TAKE ANY ACTION IN ITS DISCRETION WITH REGARD TO ANY MATTER RELATED TO THIS AGREEMENT AND SUCH ACTION OR INACTION IS CHALLENGED FOR ANY REASON, THE PARTIES SHALL AGREE TO EXPRESSLY DIRECT THE TRIER OF FACT, IN ANY PLEADING FILED OR LEGAL PROCEEDING RESULTING THERETO, THAT FRANCHISOR'S RELIANCE ON A BUSINESS REASON IN THE EXERCISE OF ITS DISCRETION UNDER THE BUSINESS JUDGMENT RULE IS TO BE VIEWED AS A REASONABLE AND PROPER EXERCISE OF ITS DISCRETION, WITHOUT REGARD TO WHETHER OTHER REASONS FOR ITS DECISION MAY EXIST AND WITHOUT REGARD TO WHETHER THE TRIER OF FACT WOULD INDEPENDENTLY ACCORD THE SAME WEIGHT TO THE BUSINESS REASON.**
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, the franchisor retains significant discretion to make decisions that can affect a franchisee's interests, both favorably and adversely. Brueggers Bagels is not required to consider a franchisee's individual interests when making business decisions. Instead, the franchisor will use its business judgment based on its assessment of its own interests and balancing those interests against the interests of the owners of Bakeries generally, including the franchisor, its affiliates, and other franchisees. This means that decisions will be made with a broader perspective, potentially prioritizing the overall network's health over individual franchisee needs.
Brueggers Bagels will not be liable to the franchisee for how it exercises its discretion. Even if the franchisor has multiple motives for a decision, the decision is protected from challenge as long as at least one motive is a reasonable business justification. This clause significantly limits a franchisee's ability to challenge decisions made by the franchisor, even if those decisions negatively impact their specific business. The agreement explicitly directs any trier of fact to view the franchisor's reliance on a business reason as a reasonable and proper exercise of discretion.
This broad discretionary power, combined with the limited liability, places a significant amount of control in the hands of Brueggers Bagels. Prospective franchisees should carefully consider this aspect of the franchise agreement and understand that the franchisor's decisions, even if detrimental to an individual franchise, are unlikely to be successfully challenged in a legal setting, provided there is a reasonable business justification behind them. This is a common practice in franchising, where franchisors need the flexibility to manage the brand and system as a whole, but it also introduces a level of risk for franchisees who may find themselves subject to decisions that negatively impact their business.