What happens if a transfer of equity in a Brueggers Bagels franchise results in a change of control?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a business entity, your owner or owners may, without our prior written consent, sell, assign, transfer or give away to employees of Franchisee an aggregated amount of not more than twenty percent (20%) of Franchisee's outstanding equity, including the equity interest granted to the Operating Partner as required under Section 6 above provided: (i) we receive written notice of each transfer at least thirty (30) days before the transfer, which notice must identify the transferee, describe the transferee's position of employment, and include a calculation demonstrating that the planned transfer complies with this Section 8.3; and (ii) the transfer, when combined with all prior transfers of equity in Franchisee, does not result in a transfer of more than twenty percent (20%) of the outstanding equity or in a change of control of Franchisee.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, if the franchisee is a business entity, the owner(s) may sell, assign, transfer or give away to employees of Franchisee an aggregated amount of not more than twenty percent (20%) of Franchisee's outstanding equity, including the equity interest granted to the Operating Partner as required under Section 6 without Brueggers Bagels' prior written consent.
However, this is only allowed if (i) Brueggers Bagels receives written notice of each transfer at least thirty (30) days before the transfer, which notice must identify the transferee, describe the transferee's position of employment, and include a calculation demonstrating that the planned transfer complies with this Section 8.3; and (ii) the transfer, when combined with all prior transfers of equity in Franchisee, does not result in a transfer of more than twenty percent (20%) of the outstanding equity or in a change of control of Franchisee.
In essence, a Brueggers Bagels franchisee can transfer up to 20% of the equity to employees without prior consent, provided they notify Brueggers Bagels 30 days in advance and the transfer does not cause a change of control. Any transfer resulting in a change of control would likely require franchisor consent, though the document does not explicitly state this.