What are the consequences if Beard Papas fails to meet its lease obligations?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
nsent 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.
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- Landlord must provide Franchisor, at the same time that Landlord provides Tenant, with a copy of all lease amendments and assignments, and a copy of all letters and notices that Landlord sends to Tenant relating to the Lease or the Premises. Subject to the rights set forth in Section "3" of this Rider, Landlord agrees to notify Franchisor by nationally recognized overnight courier at the Notice Address of any default by Tenant under the Lease. Landlord agrees that such notice shall afford Franchisor the option for Franchisor to invoke a cure period whereby Franchisor, upon Franchisor's sole election, shall be granted an additional 15 day period to cure any monetary default by Tenant under the Lease and an additional 30 day period to cure any non-monetary default by Tenant under the Lease.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the consequences of a Beard Papas franchisee failing to meet their lease obligations can trigger certain actions by the franchisor. Specifically, if the franchisee defaults under the terms of the lease, the franchisor has the option, but not the obligation, 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, it will not be obligated to pay the landlord more than two months of past due rent, real estate taxes, and common area maintenance charges. Furthermore, if the franchisor assigns the lease to another approved franchisee, Beard Papas will not be responsible for any obligations arising under the lease after the assignment's effective date. The landlord's consent is not required for the assignment or assumption of the lease by the franchisor, and no assignment fee or rent increase can result from this.
Additionally, the Rider in the lease agreement states that the franchisee is not permitted to transfer, sublease, encumber, or assign their interests in the lease without the prior written consent of Beard Papas. If the franchisee seeks the landlord's consent for any such actions, the landlord must condition their approval on the franchisee also obtaining written consent from Beard Papas. This provision ensures that Beard Papas maintains control over the location and operation of its franchises, even in situations where the franchisee faces lease-related difficulties.