Which articles in the Beard Papas Franchise Agreement outline the franchisee's obligations regarding fees?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
"Transfer Fee" shall have the meaning defined in Article 14.C.(11) of this Agreement. The Transfer Fee is a fixed sum of $15,000.
ARTICLE 2 GRANT OF FRANCHISE
2.A. GRANT OF FRANCHISE
Franchisee has requested that Franchisor grant to Franchisee the non-exclusive license and right to develop, own and operate a Beard Papa's Shop from a fixed Shop Location located within a specified territory. Relying on the representations made by Franchisee and/or Franchisee's Owners in any submitted application and during the application process, and subject to the terms and conditions of this Agreement, Franchisee's request has been approved by Franchisor, subject to the following terms and conditions:
(1) During the Term of this Agreement and subject to the rights of Franchisor including, but not limited to, the Reserved Rights, Franchisor grants to Franchisee and Franchisee accepts, the nonexclusive license, right and obligation to develop and operate, one Beard Papa's Shop in conformity with the System and this Agreement from a single fixed shop location, selected by Franchisee but requiring the approval of Franchisor ("Franchisee's Shop Location") and, as designated by Franchisor in Franchisor's discretion and Reasonable Business Judgment, within a Designated Territory;
(2) If, as of the Effective Date, Franchisee has selected a proposed Shop Location that Franchisor approves as Franchisee's Shop Location, then Franchisee's Shop Location and Designated Territory, if any, shall be identified in Schedule 1 of this Agreement.
To be effective, Schedule 1 must be completed and signed by Franchisor.
Franchisee's execution of Schedule 1 with a specific location for Franchisee's Shop Location shall constitute Franchisee's obligation to develop and operate the Franchised Business at the designated Franchisee Shop Location;
5.2 ROYALTY FEES AND OTHER FRANCHISE AGREEMENT FEES ACKNOWLEDGMENT
Franchisee agrees that pursuant to the terms of each respective Franchise Agreement respecting and/or concerning the Development Area and/or this Agreement, that nothing contained in this Agreement shall obviate and/or reduce Franchisee's obligations as set forth in each respective Franchise Agreement including, without limitation, Franchisee's obligations, respectively, to pay royalty and all other fees in accordance with each respective Franchise Agreement. Nothing contained in this Agreement shall modify, reduce or mitigate Franchisee's obligations to Franchisor. The only fee and right contained in the Franchise Agreement that is modified by this Agreement is the fixed one-time initial franchise fee paid by Franchisee to Franchisor at the time of signing the Franchise Agreement, as such initial franchise fee is set forth and defined in Section 4.2 of this Agreement as to the Development Shops.
Franchisor has the right to charge fees and expenses, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, for management services (the "Management Service Fees").
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 30–31)
What This Means (2025 FDD)
Based on the 2025 Beard Papas Franchise Disclosure Document, several articles within the Franchise Agreement address the franchisee's fee obligations. Article 14.C.(11) discusses the Transfer Fee, which is a fixed sum of $15,000. Article 5.2 acknowledges the franchisee's obligation to pay royalty and all other fees as outlined in their respective Franchise Agreement. Additionally, Article 4.2 mentions the initial franchise fee, which is a one-time payment made at the time of signing the Franchise Agreement. Article 16 outlines the Management Service Fees, which Beard Papas has the right to charge for management services if they appoint a manager to maintain operations of the Franchised Business.
These articles collectively define the various fees a Beard Papas franchisee may be required to pay, including the initial franchise fee, ongoing royalty fees, transfer fees, and potential management service fees. It is important for prospective franchisees to carefully review these sections to understand the full scope of their financial obligations. The FDD also mentions that these fees can be modified by Beard Papas from time to time.
Prospective franchisees should pay close attention to the conditions under which each fee is applicable. For example, the Transfer Fee is only relevant if the franchisee decides to transfer their franchise to another party. Similarly, Management Service Fees would only apply if Beard Papas deems it necessary to appoint a manager to oversee the franchise's operations. Understanding these conditions is crucial for accurate financial planning and risk assessment.
In addition to the specific fees mentioned, the FDD emphasizes the franchisee's ongoing obligation to comply with all fee-related terms outlined in the Franchise Agreement. This underscores the importance of thoroughly reviewing the entire agreement and seeking professional advice to fully understand the financial commitments involved in becoming a Beard Papas franchisee.