For Brueggers Bagels, what is the requirement for owners, directors, or officers of a Developer regarding a Guaranty?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.4. Personal Obligations of Owners, Officers, Directors, Management Personnel and Spouses. Each person who is or becomes an owner, director or officer of Developer must execute a Guaranty in the form we prescribe, undertaking to be bound jointly and severally by the terms of this Agreement including but not limited to those provisions in Section 11 above. The current form of Guaranty is attached to this Agreement as Exhibit D. Each person who is, or becomes, an owner or executive officer of Developer must also execute a Confidentiality and Non-competition Agreement in a form we prescribe, the current form of which is attached to this Agreement as Exhibit F. If you are a publicly-held entity, the requirements in this Section will not apply to ownership by you of less than five percent (5%) beneficial interest. In addition, at our request, if the Guarantor resides in a community property state, the Guarantor will cause his or her spouse, if any, to execute a Guaranty and you must also obtain signed Confidentiality and Non-competition Agreements referred to above. Confidentiality and Non-competition Agreements must also be obtained from any manager who has received or will receive training from us.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, each person who is or becomes an owner, director, or officer of a Developer must execute a Guaranty. This Guaranty is in a form prescribed by Brueggers Bagels, and it makes them jointly and severally bound by the terms of the Development Agreement. The specific terms that the Guaranty covers include, but are not limited to, the provisions outlined in Section 11 of the agreement.
This requirement means that if you are an owner, director, or officer of a company that enters into a Development Agreement with Brueggers Bagels, you will personally guarantee the company's obligations under that agreement. This is a significant commitment, as it puts your personal assets at risk if the company fails to meet its obligations to Brueggers Bagels. The current form of Guaranty is attached to the Development Agreement as Exhibit D.
Furthermore, if the guarantor resides in a community property state, Brueggers Bagels may request that the guarantor's spouse also execute the Guaranty. In addition to the Guaranty, owners or executive officers of the Developer must also sign a Confidentiality and Non-competition Agreement. This agreement prevents them from using Brueggers Bagels' confidential information in other ventures and from competing with the franchise.
These requirements are fairly standard in franchising, as franchisors want to ensure that the individuals behind a development company are fully committed to the success of the franchise and are held accountable for upholding the terms of the agreement. Prospective franchisees should carefully review the Guaranty and Confidentiality and Non-competition Agreement with their legal counsel to fully understand the obligations and potential liabilities they are undertaking.