Under the Development Agreement for Brueggers Bagels, who must personally guarantee the franchisee's obligations?

According to Brueggers Bagels' 2025 Franchise Disclosure Document, the Development Agreement mandates that individuals with legal or beneficial ownership interests in the Developer (the entity developing the Brueggers Bagels restaurants) must be personally bound by the Developer's obligations under the Development Agreement. These obligations include restrictions on competition, confidentiality obligations, restrictions on ownership changes, and dispute resolution provisions.

This requirement means that if a franchisee chooses to operate under a business entity such as a corporation or LLC, the individuals who own the business must still personally guarantee the obligations of the business. This is a common practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the owners if the business entity fails to meet its financial or contractual obligations.

Prospective Brueggers Bagels franchisees should carefully consider this personal guarantee requirement and understand the full extent of their obligations before signing a Development Agreement. They should also consult with an attorney and financial advisor to assess the risks and implications of providing a personal guarantee. Additionally, if the owners reside in a community property state, Brueggers Bagels may require their spouse to execute a Confidentiality and Non-Competition Agreement.