Under the Brueggers Bagels Development Agreement Guaranty, what specific restrictions on transfer of interest contained in the Agreement are the Guarantors agreeing to be bound by personally?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
The Development Agreement requires persons with legal or beneficial ownership interests in Developer to be personally bound by Developer's obligations under the Development Agreement, including restrictions on competition, confidentiality obligations, restrictions on ownership changes, and dispute resolution provisions.
During the term of the Development Agreement and for as long as you have any legal or beneficial ownership interest in Developer, 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.
You must maintain stop-transfer instructions against the transfer on your records of any ownership interests in you. If such ownership interests are certificated, each certificate must conspicuously display on its face a printed legend in substantially the following form, adjusted as necessary if you are other than a corporation:
The transfer of any ownership represented by this certificate is subject to the terms and conditions of an Agreement with BRUEGGER'S FRANCHISE CORPORATION. Reference is made to the provisions of the Agreement and to the governing documents of the Company.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to the 2025 Brueggers Bagels Franchise Disclosure Document, the Development Agreement requires individuals with legal or beneficial ownership in the Developer to be personally bound by the Developer's obligations. These obligations include restrictions on ownership changes, competition, confidentiality, and dispute resolution. This means that as a condition of owning interest in the Developer, individuals must agree to these terms, and Brueggers Bagels can directly enforce these agreements against them. If a business entity signs the Development Agreement, all individuals with legal or beneficial ownership in that entity must also sign the agreement.
Specifically, during the term of the Development Agreement and as long as an individual has any legal or beneficial ownership interest in the Developer, they cannot, without Brueggers Bagels' consent, directly or indirectly own any legal or beneficial interest in, or provide services or advice to, any Competing Business located anywhere, or any entity that grants franchises or licenses for Competing Businesses.
Furthermore, the FDD states that the transfer of any ownership interest is subject to the terms and conditions of the Development Agreement with Brueggers Bagels. The franchisee must maintain stop-transfer instructions against the transfer on their records of any ownership interests in them. If such ownership interests are certificated, each certificate must conspicuously display a printed legend stating that the transfer of any ownership represented by this certificate is subject to the terms and conditions of an Agreement with Brueggers Bagels. This ensures that any potential transfer is subject to Brueggers Bagels' approval and the terms outlined in the Development Agreement.