When is the initial franchise fee considered fully earned by Beard Papas?

According to Beard Papas's 2025 Franchise Disclosure Document, the franchisor will not require or accept payment of any initial franchise fees until the franchisee has (a) received all pre-opening and initial training obligations that it is entitled to under the franchise agreement or offering circular, and (b) is open for business. This policy protects the franchisee by ensuring that Beard Papas fulfills its initial obligations before receiving the franchise fee.

For franchisees entering into a Multi-Unit Development Agreement, the release of the franchise fee payment is proportional to the opening of each franchise outlet. This means that Beard Papas will only receive a portion of the total franchise fee as each location opens and after they have met their pre-opening obligations for that specific location. This arrangement provides a degree of financial security for franchisees as they expand their operations.

This proportional release of fees continues until Beard Papas has met all its pre-opening obligations under the agreement and the franchisee is open for business with respect to each location. This ensures that the franchisor remains incentivized to support the franchisee throughout the development process, as their compensation is directly tied to the successful opening and operation of each franchised outlet. This arrangement is more favorable for the franchisee compared to arrangements where the initial franchise fee is non-refundable and paid upfront.