Under the Brueggers Bagels Development Agreement Guaranty, what is the role of the 'Guaranty'?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, partnership, or limited liability company, the owner(s) of Franchisee identified on Exhibit A to this Agreement must execute our standard form of Guaranty.
This Guaranty will terminate upon the termination or expiration of the Agreement, except that all obligations and liabilities of the Guarantors arising from events which occurred on or before the effective date of termination will remain in full force and effect until satisfied or discharged by the Guarantors, and all covenants which by their terms continue in force after the expiration or termination of the Agreement will remain in force according to their terms.
Upon the death of a Guarantor, the Guarantor's estate will be bound by this Guaranty, but only for obligations existing at the time of death. The obligations of the surviving Guarantors will continue in full force and effect.
If the Guarantor resides in a community property state, the Guarantor will cause his or her spouse, if any, to execute this Guaranty.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to the 2025 Brueggers Bagels Franchise Disclosure Document, if the franchisee is a corporation, partnership, or limited liability company, the owner(s) of the franchisee must execute Brueggers Bagels' standard form of Guaranty. This means that the individuals who own the business entity are personally guaranteeing the obligations of the business under the Franchise Agreement.
The purpose of the Guaranty is to ensure that Brueggers Bagels has recourse to the personal assets of the owners if the franchisee, as a business entity, fails to meet its financial or contractual obligations. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.
The Guaranty remains in effect even after the termination or expiration of the Development Agreement, with the guarantor remaining responsible for obligations and liabilities arising before the termination date, as well as any covenants that extend beyond the agreement's term. If a guarantor dies, their estate remains bound by the Guaranty, but only for obligations existing at the time of death, while the obligations of any surviving guarantors continue in full force. In community property states, the guarantor's spouse may also be required to execute the Guaranty.