How does the Beard Papas Franchise Agreement address the allocation of responsibility for property taxes on the leased office space?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
r assignment that Landlord shall condition Landlord's approval upon Tenant also obtaining written consent from Franchisor.
- Upon the occurrence of (a) the termination, for any reason, of the Franchise Agreement; (b) the expiration, without renewal, of the Franchise Agreement; (c) Franchisor's exercise of Franchisor's Right of First Refusal granted to Franchisor in the Franchise Agreement; (d) Tenant's default under the terms of the Lease; and/or (e) Tenant's failure to exercise an option period under the terms of the Lease, Tenant and Landlord acknowledge and agree, that:
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.
-
- Landlord must provide Franchisor, at the same time that Landlord provides Tenant, with a copy of all lease amendments and assignments, and a copy of all letters and notices that Landlord sends to Tenant relating to the Lease or the Premises. Subject to the rights set forth in Section "3" of this Rider, Landlord agrees to notify Franchisor by nationally recognized overnight courier at the Notice Address of any default by Tenant under the Lease. Landlord agrees that such notice shall afford Franchisor the option for Franchisor to invoke a cure period whereby Franchisor, upon Franchisor's sole election, shall be granted an additional 15 day period to cure any monetary default by Tenant under the Lease and an additional 30 day period to cure any non-monetary default by Tenant under the Lease.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
Based on the 2025 Beard Papas Franchise Disclosure Document, the franchisee (referred to as Tenant in the context of the lease) is generally responsible for property taxes on the leased premises. However, in specific situations where 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. If Beard Papas assumes the lease, they are not obligated to pay more than two months of past due real estate taxes.
Furthermore, the Lease Agreement Rider stipulates that the franchisee cannot transfer or assign their interests in the lease without prior written consent from Beard Papas. This gives Beard Papas control over who occupies the leased premises and ensures that any new tenant is also approved by them. The rider also states that it takes precedence over any conflicting terms in the original lease, reinforcing Beard Papas's rights as a third-party beneficiary.
In the event that Beard Papas assumes the lease and subsequently assigns it to another approved franchisee, Beard Papas is no longer responsible for any obligations, debts, liabilities, or payments arising under the lease after the assignment date. This protects Beard Papas from long-term financial obligations related to the lease if they choose to transfer it to a new franchisee. The landlord's agreement to allow assignment or assumption of the lease by Beard Papas without requiring consent or fees further streamlines this process.
Prospective franchisees should carefully review the Lease Agreement Rider (Exhibit 4) and the Franchise Agreement to fully understand their obligations regarding property taxes and lease responsibilities. It is important to note that the franchisee is responsible for selecting the site for their shop and negotiating the lease terms, subject to Beard Papas's approval. Understanding these financial responsibilities is crucial for assessing the overall cost and profitability of a Beard Papas franchise.