Does the Brueggers Bagels Franchisor have any liability to the Developer for exercising its business judgment?
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 has no liability to the franchisee for exercising its business judgment. The agreement between Brueggers Bagels and its franchisees grants the franchisor the discretion to make decisions, take actions, or refrain from taking actions that may affect the franchisee's interests favorably or adversely.
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, without specifically considering the individual interests of any particular franchisee. Brueggers Bagels explicitly states that it "shall have no liability to Franchisee for the exercise of its discretion in this manner".
Moreover, even if Brueggers Bagels has numerous motives for a particular action or decision, as long as at least one motive is a reasonable business justification, no trier of fact in any legal action shall substitute its judgment for the Franchisor's judgment so exercised, and such action or decision shall not be subject to challenge for abuse of discretion. The FDD emphasizes that if any action or inaction by the franchisor is challenged, the parties must direct the trier of fact to view the franchisor's reliance on a business reason as a reasonable and proper exercise of discretion, regardless of other potential reasons or the trier of fact's independent assessment.