What happens if Beard Papas terminates a lease agreement early?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, if the Franchise Agreement is terminated for any reason, or upon its expiration without renewal, or if the franchisor exercises its right of first refusal, or if the tenant (franchisee) defaults under the lease terms, or if the tenant fails to exercise an option period under the lease, Beard Papas has the option, but not the obligation, to assume or renew the lease. This includes the right to sublease the premises to another Beard Papas franchisee.
If Beard Papas chooses to assume the lease, it will not be obligated to pay the landlord more than two months of past due rent, real estate taxes, and common area maintenance charges. If Beard Papas assumes the lease and subsequently assigns it to another approved franchisee, Beard Papas will not be responsible for any obligations arising under the lease after the assignment date. The landlord's consent is not required for the assignment or assumption of the lease by Beard Papas, and no assignment fee or rent increase will result from such actions.
This clause protects Beard Papas by giving it control over the location if a franchisee leaves the system, ensuring continuity of the brand. For a franchisee, this means that in certain adverse situations, Beard Papas can step in to take over the lease. However, the FDD does not specify what happens if Beard Papas does not assume the lease, so prospective franchisees should seek clarification on this point from the franchisor.