Following termination of a Beard Papas franchise, what is the geographic restriction on the franchisee, Owners, and their spouses regarding participation in a competitive business?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
You and, if you are a Corporate Entity, each of your members, shareholders and/or partners (collectively, "Owners"), must personally guarantee all of your obligations to us under the Franchise Agreement. Each Owner and the spouse of each Owner must personally guarantee your obligations to us under the Franchise Agreement. You and each Owner and spouse must also promise in writing that, among other things, during the term of the Franchise Agreement you will not participate in any business that in any way competes with the Franchised Business, and that for 24 months after the expiration of termination of the Franchise Agreement (with said period being tolled during any periods of non-compliance), neither you nor your Owners and their spouses will participate in any competitive business located within and/or servicing customers located within your Designated Territory and a 25 mile radius surrounding your Designated Territory. Further you will not participate in any competitive business located within and/or servicing customers located within a 10 mile radius of any other Beard Papa's Shop and/or the designated territory of any other Beard Papa's Shop.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 42–43)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, franchisees, their Owners, and their spouses face post-termination restrictions on competitive business activities. Specifically, for 24 months after the expiration or termination of the Franchise Agreement, these parties cannot participate in any competitive business located within or servicing customers within the franchisee's Designated Territory and a 25-mile radius surrounding it. This 24-month period is paused during any periods of non-compliance.
In addition to the franchisee's territory, the restrictions extend to other Beard Papas locations. Franchisees, Owners, and their spouses are also prohibited from participating in any competitive business located within or servicing customers within a 10-mile radius of any other Beard Papa's Shop and/or the designated territory of any other Beard Papa's Shop.
These non-compete clauses are typical in franchising to protect the brand and other franchisees. A prospective Beard Papas franchisee should carefully consider these restrictions, as they could significantly limit their business opportunities for two years after leaving the system. It is important to understand the full scope of the Designated Territory and the locations of other Beard Papas shops to assess the potential impact of these restrictions.