Does a Beard Papas franchisee have an opportunity to cure a default that leads to automatic termination?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
ndar month that the final Development Shop is required to be opened and operating under the Development Schedule, (b) the day the final Shop is open, or (c) the date of termination of this Agreement pursuant to the terms of this Agreement. Upon expiration or termination of this Agreement for any reason, Franchisee will not have any rights within the Development Area other than territorial rights that may have been granted to Franchisee and maintained by Franchisee pursuant to the terms of any and/or each respective Franchise Agreement. The Term may not be renewed or extended.
3.2 TERMINATION BY FRANCHISOR
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Shops within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of Beard Papa's Shops in accordance with Development Schedule;
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, Beard Papas has the right to terminate the agreement without providing an opportunity to cure under specific circumstances. These circumstances include abandoning obligations under the agreement, failing to meet development obligations, becoming insolvent or bankrupt, or the termination of another franchise agreement between the Beard Papas and the franchisee. This means that if a franchisee engages in any of these actions, Beard Papas can immediately terminate the agreement without giving the franchisee a chance to correct the issue.
However, the Michigan FDD Amendment included in Item 23 states that a provision allowing Beard Papas to terminate a franchise before the expiration of its term requires 'good cause'. Good cause includes the franchisee's failure to comply with any lawful provision of the Franchise Agreement, and the franchisee must be given written notice of the failure and a reasonable opportunity, which in no event need be more than 30 days, to cure the failure. This amendment provides an opportunity to cure a default in Michigan, which contrasts with the instances where Beard Papas can terminate the agreement without allowing the franchisee to cure the default.
Additionally, amendments for Virginia and Washington state that state laws may supersede the franchise agreement in areas of termination. This means that franchisees in those states may have additional rights or protections regarding termination and the opportunity to cure defaults, as defined by their respective state laws. Therefore, prospective franchisees should be aware of the specific termination and cure provisions in the franchise agreement and any applicable state laws that may modify those provisions, especially in Michigan, Virginia, and Washington.