What happens automatically upon the occurrence of Brueggers Bagels licensor insolvency?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.2. Termination by Licensee. Licensee shall have the right to terminate this Agreement, if any one or more of the following events shall occur:
- (a) Licensor becomes insolvent, or takes the benefit of any present or future insolvency statute, or shall make a general assignment for the benefit of creditors, or file a voluntary petition in bankruptcy or a petition or answer seeking an arrangement for its reorganization, or the readjustment of its indebtedness under the federal bankruptcy laws, or under any other law or statute of the United States or any state thereof, or shall consent to the appointment of a receiver, trustee or liquidator of all or substantially all of its property or shall materially breach the provisions of Section 10.1 hereof;
- (d) With respect to Section 10.2(a), termination shall be automatic upon the occurrence of the event.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, if the licensor becomes insolvent, the licensee has the right to terminate the agreement, and such termination is automatic upon the event's occurrence. This means that if Brueggers Bagels, as the licensor, becomes insolvent or takes certain actions related to insolvency, the franchisee's agreement is immediately terminated without requiring any further action or notice from the franchisee.
This provision protects the franchisee by allowing them to exit the agreement if Brueggers Bagels faces severe financial difficulties. Insolvency can indicate an inability of the franchisor to support the franchise system, potentially affecting the franchisee's business operations and brand reputation. By providing an automatic termination option, the franchisee can avoid further losses or complications associated with a failing franchisor.
It is important for a prospective Brueggers Bagels franchisee to understand the implications of this automatic termination clause. While it offers a safety net in case of licensor insolvency, it also means the franchisee will immediately lose their rights to operate under the Brueggers Bagels brand and must cease all associated activities. The franchisee should carefully consider the potential financial and operational impacts of such a termination, including the loss of the business and the need to find alternative income sources.