How are the Management Service Fees determined for a Beard Papas franchise?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
If, at any time, the Franchised Business is not being managed by a Managing Owner or Operating Manager who satisfactorily completed the Training Program, Franchisor is authorized, but is not required, to immediately appoint a manager to maintain the operations of the Franchised Business for and on behalf of Franchisee.
Franchisor's appointment of a manager of the Franchised Business does not relieve Franchisee of its obligations or constitute a waiver of Franchisor's right to terminate the Franchise pursuant to Article 16.
Franchisor is not liable for any debts, losses, costs or expenses incurred in the operations of the Franchised Business or to any creditor of Franchisee for any products, materials, supplies or services purchased by the Franchised Business while it is managed by Franchisor's appointed manager.
Franchisor has the right to charge fees and expenses, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, for management services (the "Management Service Fees").
Any determination as to whether or not Franchisor may elect to provide management services, if any, and the extent of such services, and/or the discontinuation thereof, shall be exclusively determined by Franchisor in Franchisor's Reasonable Business Judgment.
The Management Service Fee shall be immediately payable upon invoice by us.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, the franchisor has the right to charge fees and expenses for management services, referred to as "Management Service Fees." The amount of these fees is determined by Beard Papas in its Reasonable Business Judgment. These fees are applicable if the Franchised Business is not being managed by a Managing Owner or Operating Manager who has satisfactorily completed the required Training Program. In such cases, Beard Papas is authorized, but not required, to appoint a manager to maintain the operations of the Franchised Business on behalf of the franchisee.
It's important to note that the appointment of a manager by Beard Papas does not relieve the franchisee of their obligations under the Franchise Agreement, nor does it waive Beard Papas's right to terminate the franchise. Furthermore, Beard Papas is not liable for any debts, losses, costs, or expenses incurred during the period when the Franchised Business is managed by their appointed manager, nor are they liable to any creditor of the franchisee for purchases made during this time.
The Management Service Fee is payable immediately upon invoicing by Beard Papas. The decision to provide management services, the extent of those services, and their discontinuation are all determined exclusively by Beard Papas in its Reasonable Business Judgment. This means that Beard Papas has considerable discretion in deciding when and how to intervene in the management of a franchise and in setting the associated fees.
For a prospective franchisee, this highlights the importance of having a qualified Managing Owner or Operating Manager in place to avoid the imposition of Management Service Fees. It also underscores the potential financial burden if Beard Papas deems it necessary to step in and manage the business. Franchisees should seek clarity from Beard Papas on what specific factors would trigger the need for management services and how the fees are calculated to be fully aware of the potential costs.