Can a Beard Papas franchisee terminate the Multi-Unit Development Agreement?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Sections in Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | 3 | Varies depending on the number of Shops to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Shop required for development, or the last day of the calendar month in which the final Shop was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
| term | applicable | Agreement. | |
| c. | Requirements for franchisee | Not | There is no renewal of the Multi-Unit Development |
| to renew or extend | applicable | Agreement. | |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi-Unit Development Agreement. Subject to state law. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we |
| without cause | applicable | mutually agree, in writing, to terminate. | |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Shops within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Shop and/or any other Franchise Agreement |
| g. | "Cause" defined curable defaults | Not applicable | Not applicable. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–51)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, a franchisee does not have the option to terminate the Multi-Unit Development Agreement. The FDD states explicitly that there is no provision for franchisee termination, although this is subject to state law. This means that once a franchisee enters into a Multi-Unit Development Agreement with Beard Papas, they are committed to fulfilling the development schedule and other obligations outlined in the agreement.
Beard Papas, however, retains the right to terminate the Multi-Unit Development Agreement with cause under specific circumstances. These circumstances include abandonment of obligations, discontinuing development of shops within the designated area for four consecutive months (or a shorter period indicating intent to discontinue), insolvency or bankruptcy, failure to meet development obligations under the Development Schedule, or termination of any individual Franchise Agreement associated with a shop developed under the Multi-Unit Development Agreement.
If the Multi-Unit Development Agreement is terminated, the franchisee loses all rights under the agreement, and there are no renewal rights. This lack of franchisee termination options is not uncommon in franchise agreements, as franchisors often want to ensure that development schedules are met and that franchisees are committed to expanding the brand within the agreed-upon territory. Prospective franchisees should carefully consider the implications of this lack of termination option before entering into a Multi-Unit Development Agreement with Beard Papas.