Is Beard Papas a fiduciary or trustee of the Brand Development Fund?

According to Beard Papas's 2025 Franchise Disclosure Document, Beard Papas is not required to segregate the Brand Development Fund from its general operating funds and is not a fiduciary or trustee of the Brand Development Fund. This means that Beard Papas has considerable discretion in how the Brand Development Fund is managed and spent, and is not legally bound to act solely in the best interests of the franchisees regarding the fund.

As a franchisee, you contribute up to 2% of your monthly Gross Sales to the Brand Development Fund. This fund can be used for various purposes, including market studies, research, advertising, and administrative costs. Beard Papas may use the fund to compensate themselves for administrative fees and employee salaries related to managing the fund. While the Brand Development Fund will maintain unaudited financial records detailing its expenditures, Beard Papas is only obligated to provide franchisees with an unaudited accounting of how the monies were spent once per 12-month period.

This arrangement carries potential implications for franchisees. Since Beard Papas is not a fiduciary, there is less legal recourse if franchisees disagree with how the funds are spent, as long as the expenditures fall within the broad categories outlined in the FDD. The lack of a fiduciary duty gives Beard Papas greater latitude in using the fund for activities that may primarily benefit the franchisor, such as covering administrative costs or indirectly marketing the sale of franchises. Franchisees should carefully consider whether they are comfortable with this level of discretion before investing in a Beard Papas franchise.