In the event of an approved transfer of the Beard Papas franchise agreement, are the franchisee's obligations that accrued prior to the transfer date still in effect?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
s that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:
(1) Franchisee must provide written notice to Franchisor of the proposed Transfer of this Agreement at least 30 days prior to the Transfer, and Franchisee must have also satisfied the obligations set forth in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts and other debts, of whatever nature or kind, in a timely manner;
- (3) Franchisee, each Owner, and each Spouse must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee and their respective spouses shall personally execute the Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1. Each owner of the transferee shall also be required to execute such further agreements designated by Franchisor whereby the proposed transferee assumes each and every obligation and responsibility of Franchisee as set forth in this Agreement;
- (5)
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, a franchisee remains liable for all obligations to Beard Papas, even after a transfer, with one exception. Following a transfer that fully complies with the outlined requirements, the franchisee is no longer obligated to pay Royalty Fees and Advertising Contributions that accrue after the transfer date.
To gain approval for a transfer, the franchisee must meet several conditions. These include providing written notice at least 30 days prior to the transfer, satisfying all accrued monetary and outstanding obligations to Beard Papas and its affiliates, and ensuring they are not in default or material breach of the franchise agreement. The proposed transferee must also meet Beard Papas's standards for franchisees and not own or operate a competitive business.
Furthermore, the transferee must agree to be bound by all terms and conditions of the existing franchise agreement. The transferee may also be required to execute Beard Papas's current standard franchise agreement if the transfer involves substantially all of the assets of the franchised business or a controlling interest in the franchisee. The franchisee, owners, and spouses must also execute a General Release, releasing Beard Papas from any claims arising on or before the transfer date. The franchisee must also pay a Transfer Fee of $15,000 to Beard Papas.