Does a sale of assets by Brueggers Bagels affect the franchisee's obligations under the Franchise Agreement?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
While this Agreement is in effect, if we acquire the ownership or assets of any business operating at one or more sites located within the Development Area, which we determine in our sole discretion to convert to a Bakery (an "Acquisition Site"), we will offer to sell you the Acquisition Site for the price we paid for the Acquisition Site (plus the amounts identified in Section 1.7.1), provided that, in our judgment: (1) the sale would not conflict with any existing legal obligation of ours or of the business being acquired; (2) the sale would not preclude the completion of the acquisition on the terms agreed to by us; and (3) the sale would not interfere with any other agreement, arrangement or combination or affect federal or state income tax consequences arising from the acquisition; and provided further, that you agree: (a) to execute, concurrently with your purchase, a Franchise Agreement as modified for use in connection with each Acquisition Site; (b) to convert each Acquisition Site to a Bakery as soon as practicable thereafter (but in no event later than the date specified by us) in accordance with our standards and specifications; and (c) to close or sell within a reasonable time period specified by us any Acquisition Sites which are not suitable for conversion to Bakeries.
Any Acquisition Site you purchase and convert under this Section 1.7 will be counted toward the number of Bakeries required by the Development Schedule.
Notwithstanding anything to the contrary in this Section 1.7, we will not convert an Acquisition Site that is within a Protected Area, as defined in the Franchise Agreement for any Bakery of yours that is located within the Development Area, unless we provide reasonable evidence that the conversion will not have a material adverse effect on the Net Sales of your Bakery.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the sale of assets by Brueggers Bagels can affect a franchisee's obligations under the Franchise Agreement, specifically when Brueggers Bagels acquires a business operating at a site within the franchisee's development area. In such cases, Brueggers Bagels may offer to sell the 'Acquisition Site' to the franchisee at the price they paid for it, plus additional amounts. However, this offer is contingent on several conditions, including that the sale does not conflict with Brueggers Bagels' existing legal obligations or interfere with any other agreements.
If the franchisee agrees to purchase the Acquisition Site, they must execute a Franchise Agreement modified for use with the Acquisition Site, convert the site to a Brueggers Bagels bakery according to Brueggers Bagels' standards, and close or sell any Acquisition Sites unsuitable for conversion within a timeframe specified by Brueggers Bagels. Any Acquisition Site purchased and converted counts toward the number of bakeries required by the Development Schedule.
Brueggers Bagels will not convert an Acquisition Site within a franchisee's Protected Area if it would materially and adversely affect the Net Sales of the franchisee's bakery, unless reasonable evidence is provided to the contrary. This clause protects the franchisee from cannibalization of sales due to the franchisor's actions. These stipulations ensure that the franchisee's obligations are affected by the sale of assets only under specific, controlled circumstances, with considerations for the franchisee's existing territory and sales.