How does the Beard Papas Franchise Agreement address the allocation of responsibility for common area maintenance (CAM) charges?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, the Franchise Agreement addresses common area maintenance (CAM) charges primarily in the context of the franchisor's option to assume the lease under certain circumstances. Specifically, if the Franchise Agreement is terminated, expires without renewal, or if the franchisee defaults on the lease, Beard Papas has the option to assume the lease.
In the event that Beard Papas chooses to assume the lease, the agreement stipulates that Beard Papas will not be obligated to pay the landlord more than two months of past due rent, real estate taxes, and common area maintenance charges. This provision protects Beard Papas from inheriting excessive financial liabilities related to the property should they decide to take over the lease. Furthermore, if Beard Papas assumes the lease and subsequently assigns it to another approved franchisee, Beard Papas will not be responsible for any obligations arising after the assignment date.
This arrangement benefits prospective Beard Papas franchisees by clarifying the franchisor's responsibilities regarding CAM charges in specific default scenarios. It also ensures that if Beard Papas steps in to assume a lease and then transfers it to a new franchisee, the original franchisee's default will not create long-term financial burdens for Beard Papas. However, the FDD does not elaborate on the franchisee's direct responsibilities for CAM charges during the normal course of the franchise agreement. A prospective franchisee should seek clarification from Beard Papas regarding the typical CAM charges, how they are calculated, and what their ongoing obligations would be under the lease agreement.