Which articles in the Beard Papas Franchise Agreement outline the non-competition covenants for a Beard Papas franchisee?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
der this Agreement. Among other things and without limitation to the foregoing, Franchisee expressly agrees that any claim by Franchisee as to the alleged non-performance of Franchisor's obligations shall not permit and/or entitle Franchisee to withhold payments due Franchisor under this Agreement.
ARTICLE 6 RESTRICTIVE COVENANTS AND OBLIGATIONS
6.A. NECESSITY FOR RESTRICTIVE COVENANTS
Franchisee agrees that only through the course of entering into this Agreement is Franchisee being provided with access to the System, Franchisor's training, use of the Licensed Marks and, access to the Operations Manual and Confidential Information. Franchisee agrees that competition by Franchisee, Owners, Spouses and/or Immediate Family Members could jeopardize the entire System and cause irreparable harm to Franchisor and franchisees of Beard Papa's Shops. Accordingly, Franchisee and Franchisee's Owners and, Spouses agree to comply with the restrictive covenants set forth in this Article 6 and throughout this Agreement.
6.B. RESTRICTIVE COVENANTS: KNOW-HOW
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) Franchisee's Owners and Spouses and, that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.C. RESTRICTIVE COVENANTS: CONFIDENTIAL INFORMATION
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Confidential Information in any business or capacity other than the Beard Papa's Shop operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any
Confidential Information; (d) shall take such reasonable steps as Franchisor may ask of Franchisee from time to time to prevent unauthorized use or disclosure of the Confidential Information; and (e) shall stop using the Confidential Information immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Confidential Information was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business;
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 30–31)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, Article 6 of the Franchise Agreement contains information regarding restrictive covenants and obligations. Specifically, Article 6.A discusses the necessity for restrictive covenants, noting that franchisees gain access to the Beard Papas system, training, licensed marks, operations manual, and confidential information through the agreement. It states that competition from the franchisee, their owners, spouses, or immediate family members could jeopardize the entire system and cause irreparable harm to Beard Papas and its franchisees. Therefore, compliance with the restrictive covenants outlined in Article 6 and throughout the agreement is required.
Article 6.D outlines in-term non-competition obligations, preventing franchisees from engaging in activities such as owning or having an interest in a competitive business (with a minor exception for owning 3% or less of a publicly traded company), operating or managing a competitive business, diverting business or customers from Beard Papas, inducing customers to other businesses, or violating Articles 6.B and/or 6.C. These activities are considered unfair competition and harmful to Beard Papas and its franchisees. These obligations also apply to the franchisee's owners and spouses, who must sign an Owner and Spouse Agreement and Guaranty.
Article 6.E addresses post-termination non-competition obligations. Additionally, Item 15 of the FDD mentions that franchisees, their owners, and spouses must agree in writing not to participate in any business that competes with Beard Papas during the term of the Franchise Agreement. For 24 months after the agreement's expiration or termination, they are restricted from participating in any competitive business within the Designated Territory and a 25-mile radius, as well as within a 10-mile radius of any other Beard Papa's shop or designated territory. It is important to note that these non-compete clauses may vary based on state laws, as indicated by the North Dakota Franchise Agreement Amendment, which states that such covenants are generally considered unenforceable in North Dakota.