Under the Brueggers Bagels Development Agreement, what obligations of the Developer are persons with ownership interests personally bound by?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer is developing one or more Bruegger's ("Bakeries) pursuant to a Development Agreement (the "Development Agreement") with BRUEGGER'S FRANCHISE CORPORATION ("BFC").
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.
- 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)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, the Development Agreement stipulates that individuals holding legal or beneficial ownership interests in the Developer are personally bound by the Developer's obligations. These obligations encompass several key areas, including restrictions on competition, confidentiality obligations, restrictions on ownership changes, and dispute resolution provisions. This means that these individuals are not only responsible for ensuring the Developer adheres to these obligations but are also personally liable for any breaches.
This personal liability extends to various aspects of the Brueggers Bagels business. For instance, owners must maintain the confidentiality of sensitive information, avoid engaging in any competitive business activities that could harm Brueggers Bagels, and adhere to the procedures outlined for resolving disputes. Furthermore, any changes in ownership must comply with the restrictions specified in the Development Agreement.
Additionally, each person who is or becomes an owner, director, or officer of Developer must execute a Guaranty in a prescribed form, undertaking to be bound jointly and severally by the terms of the Development Agreement, including those provisions in Section 11. They must also execute a Confidentiality and Non-competition Agreement in a prescribed form. If the Guarantor resides in a community property state, their spouse may also be required to execute a Guaranty and sign Confidentiality and Non-competition Agreements. These measures ensure that all key individuals associated with the Developer are fully committed to upholding the terms of the Development Agreement and protecting Brueggers Bagels' interests.
This requirement is a common practice in franchising, designed to protect the franchisor's brand and business interests by ensuring that those with a significant stake in the franchise operation are fully committed to its success and compliance with the franchise agreement. Prospective Brueggers Bagels developers should carefully review these obligations and ensure they are prepared to accept personal responsibility for them.