Under the Brueggers Bagels Development Agreement Guaranty, what rights does each Guarantor waive?
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)
Based on the 2025 Brueggers Bagels Franchise Disclosure Document, each person who is or becomes an owner, director, or officer of a developer must execute a Guaranty. This Guaranty binds them jointly and severally to the terms of the Development Agreement, including the provisions outlined in Section 11 of the agreement. If a guarantor resides in a community property state, their spouse may also be required to execute a Guaranty.
This requirement ensures that Brueggers Bagels can enforce the Development Agreement against the individuals who control the developer entity, not just the entity itself. By signing the Guaranty, these individuals agree to be personally liable for the developer's obligations under the Development Agreement. This could include financial obligations, performance obligations (such as meeting development schedules), and other responsibilities outlined in the agreement.
The obligation for owners, directors, and officers to sign a Guaranty is a standard practice in franchising. It provides the franchisor with an additional layer of security and recourse in case the developer fails to meet its obligations. Prospective Brueggers Bagels developers should carefully review the terms of the Guaranty and understand the potential personal liability they are assuming. They should also consult with legal and financial advisors to fully assess the implications of signing such a document.
It is important to note that the FDD excerpt does not specify which rights the Guarantor waives. To fully understand the rights waived by the Guarantor, a prospective franchisee should review the full Development Agreement and the Guaranty attached as Exhibit D.