Does the Brueggers Bagels franchisor have any liability to the franchisee for exercising its discretion?
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's 2025 Franchise Disclosure Document, the franchisor has no liability to the franchisee for exercising its business judgment. The franchise agreement grants Brueggers Bagels the discretion to make decisions or take actions that may affect the franchisee's interests, without considering any franchisee's individual interests.
Specifically, Brueggers Bagels 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 Brueggers Bagels, its affiliates, and other franchisees. The FDD states that Brueggers Bagels will not consider a franchisee's individual interests.
Moreover, even if Brueggers Bagels has multiple motives for a particular action or decision, as long as at least one motive is a reasonable business justification, no legal action shall substitute its judgment for Brueggers Bagels's judgment, and such action or decision shall not be subject to challenge for abuse of discretion. If any action is challenged, the parties must agree to direct the trier of fact that Brueggers Bagels's reliance on a business reason is a reasonable and proper exercise of its discretion.