Can Beard Papas bring an action to enforce its rights under the lease rider?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, Franchisor and Franchisor's successors and assigns (collectively referred to as "Franchisor") is/are intended third party beneficiaries of this Rider.
NOW THEREFORE, Landlord and Tenant acknowledge and agree to the following:
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- This Rider supplements and amends the Lease. In the event of any inconsistency or conflict between the terms of this Rider and the Lease, the terms of this Rider shall prevail. Landlord and Tenant acknowledge that the rights set forth in this Rider may not be reduced, modified or altered without the express written consent of Franchisor.
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- Landlord and Tenant both agree that Tenant shall not be permitted to transfer, sublease, encumber and/or otherwise assign Tenant's interests in the Lease and/or the Leased Premises without the prior written consent of Franchisor. Without limitation to the foregoing, among other things, Tenant agrees that if Tenant wishes to transfer any interests in the Lease or the Leased Premises that Tenant must request the written
consent of Franchisor. If Tenant requests Landlord's consent to Tenant's amendment, transfer and/or assignment of Tenant's interests in the Lease and/or the Leased Premises and if Landlord is inclined to approve of such amendment, transfer and/or assignment that Landlord shall condition Landlord's approval upon Tenant also obtaining written consent from Franchisor.
- Upon the occurrence of (a) the termination, for any reason, of the Franchise Agreement; (b) the expiration, without renewal, of the Franchise Agreement; (c) Franchisor's exercise of Franchisor's Right of First Refusal granted to Franchisor in the Franchise Agreement; (d) Tenant's default under the terms of the Lease; and/or (e) Tenant's failure to exercise an option period under the terms of the Lease, Tenant and Landlord acknowledge and agree, that:
Franchisor will have the option, but not the obligation, to assume or renew the Lease and the occupancy of the Leased Premises, including the right to sublease to another Franchisee of the Beard Papa's Franchise System, for all or any part of the remaining term of the Lease and, in connection with said assumption, Franchisor will not be obligated to pay to Landlord more than two months past due rent, real estate taxes and common area maintenance charges. In the event Franchisor assumes Tenant's leasehold interest in the Lease pursuant to the terms of this Agreement and subsequently assigns the Lease and its leasehold interest to a Beard Papa's franchisee approved by Landlord, Franchisor shall not be responsible for any obligations, debts, liabilities or payments arising and/or accruing under the Lease after the effective date of such assignment. Landlord agrees that any assignment of the Lease and Tenant's leasehold interests in the Lease by Tenant to Franchisor and/or assumption by Franchisor of the Lease and such leasehold interests shall not require Landlord consent and shall not require any payment of any assignment fee or similar charge or result in any increase in rent or other fees as a result of such assignment and/or assumption.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, Beard Papas, as the Franchisor, is an intended third-party beneficiary of the Lease Agreement Rider. This means that Beard Papas has specific rights related to the lease of the premises where a franchise operates. The Lease Agreement Rider supplements and amends the original lease, and in case of any conflict between the rider and the lease, the terms of the rider take precedence. Importantly, the rights outlined in the rider cannot be reduced, modified, or altered without the express written consent of Beard Papas.
One significant right granted to Beard Papas is control over the transfer of the lease. A franchisee (Tenant) is not allowed to transfer, sublease, encumber, or assign their interests in the lease or the leased premises without first obtaining written consent from Beard Papas. If the landlord is considering approving a transfer or assignment, they must condition their approval on the franchisee also securing written consent from Beard Papas. This provision ensures that Beard Papas maintains oversight over who operates a franchise at a particular location.
Furthermore, under certain conditions such as termination or expiration of the Franchise Agreement, franchisee default, or failure to exercise an option period, Beard Papas has the option to assume or renew the lease. This includes the right to sublease the premises to another Beard Papas franchisee. If Beard Papas assumes the lease, they are only obligated to pay up to two months of past due rent, real estate taxes, and common area maintenance charges. The landlord's consent is not required for Beard Papas to assume the lease, and no assignment fees or rent increases can be imposed as a result of this assumption. This provides Beard Papas with a mechanism to maintain a location within its franchise system even if the original franchisee is no longer operating the business.
Given these rights and benefits as a third-party beneficiary, Beard Papas can take action to enforce its rights under the lease rider. This may include legal action to prevent unauthorized transfers or to enforce its option to assume the lease under the conditions specified in the rider. The lease agreement rider is attached to the Franchise Agreement as Exhibit 4.