What are the consequences if a Beard Papas franchisee abandons their obligations under the Multi-Unit Development Agreement?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Sections in Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | 3 | Varies depending on the number of Shops to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Shop required for development, or the last day of the calendar month in which the final Shop was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
| term | applicable | Agreement. | |
| c. | Requirements for franchisee | Not | There is no renewal of the Multi-Unit Development |
| to renew or extend | applicable | Agreement. | |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi-Unit Development Agreement. Subject to state law. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we |
| without cause | applicable | mutually agree, in writing, to terminate. | |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Shops within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Shop and/or any other Franchise Agreement |
| g. | "Cause" defined curable defaults | Not applicable | Not applicable. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–51)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, if a franchisee abandons their obligations under the Multi-Unit Development Agreement, Beard Papas can terminate the agreement with cause. Abandonment is explicitly listed as one of the conditions under which Beard Papas may terminate the Multi-Unit Development Agreement.
Other conditions that could lead to termination include failing to meet development obligations outlined in the Development Schedule for any single Development Period. This includes not establishing, opening, or maintaining the required cumulative number of Beard Papas shops. Termination can also occur if the franchisee becomes insolvent or bankrupt, or if any action is taken against them under insolvency, bankruptcy, or reorganization acts, or if they make an assignment for the benefit of creditors, or if a receiver is appointed. Additionally, if any single Franchise Agreement is terminated for any Beard Papas shop, it can trigger termination of the Multi-Unit Development Agreement.
It is important to note that Beard Papas can only terminate the Multi-Unit Development Agreement without cause if both parties mutually agree in writing to terminate the agreement. This provision protects the franchisee from arbitrary termination without a valid reason. The Multi-Unit Development Agreement does not offer the franchisee an option to terminate the agreement.