During the term of the Brueggers Bagels Franchise Agreement, what is prohibited regarding ownership in a Competing Business?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of the Franchise Agreement and for as long as you have any legal or beneficial ownership interest in Franchisee, you agree that you will not, without BFC's consent (which consent may be withheld at BFC's discretion) directly or indirectly (such as through an Affiliate or family members) own any legal or beneficial interest in, or render services or give advice in connection with: (a) any Competing Business located anywhere; or (b) any entity located anywhere that grants franchises or licenses interests to others to operate any Competing Business.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, during the term of the Franchise Agreement, a franchisee is restricted from having any ownership or involvement with a competing business without the franchisor's consent. Specifically, as long as a franchisee holds any legal or beneficial ownership interest in the Brueggers Bagels franchise, they cannot directly or indirectly own any legal or beneficial interest in, render services, or give advice in connection with any Competing Business located anywhere. This restriction also applies to any entity that grants franchises or licenses to others to operate any Competing Business, regardless of location. Brueggers Franchise Corporation (BFC) has the discretion to withhold consent.
This non-compete clause is standard in franchising to protect the brand and prevent franchisees from using the franchisor's confidential information and business model to benefit a competing business. The definition of "Competing Business" is broad, encompassing not only direct competitors but also entities involved in franchising similar concepts. This prevents a Brueggers Bagels franchisee from simultaneously operating or investing in a similar food service business, even if it's under a different brand.
For a prospective Brueggers Bagels franchisee, this means they must be fully committed to the franchise and cannot have active ownership or operational roles in other similar businesses during the term of their agreement. Seeking consent from BFC is an option, but approval is not guaranteed and is at the franchisor's discretion. This restriction aims to ensure that the franchisee's focus remains solely on the success of their Brueggers Bagels franchise and that they do not divert resources or knowledge to competing ventures.
After the franchise agreement expires or is terminated, a different set of restrictions apply, typically involving a limited geographic area and time frame. However, during the term of the agreement, the restriction against involvement with any Competing Business is absolute without the franchisor's explicit consent.