What is the minimum ownership interest required for an individual to be considered an 'Owner' of a Beard Papas franchise?

According to Beard Papas's 2025 Franchise Disclosure Document, an 'Owner' includes individuals holding a 5% or more direct or indirect ownership interest in the franchise. This definition extends not only to those with direct ownership in the Beard Papas franchise itself but also to those who have ownership in any entity that controls the franchise.

This broad definition has implications for prospective franchisees. It means that even a relatively small ownership stake can subject an individual to the responsibilities and obligations of an 'Owner' as defined by the franchise agreement. These responsibilities could include personal guarantees, participation in training programs, and adherence to confidentiality and non-competition agreements.

Furthermore, the definition encompasses officers and directors of the franchisee, the managing member or manager of a limited liability company franchisee, and the Managing Owner. The Managing Owner is required to possess, maintain, and own not less than 25% of the equity and ownership interests in the Franchisee and must manage the operations of the Franchised Business. Therefore, while a 5% ownership stake qualifies someone as an 'Owner', a Managing Owner has a higher ownership threshold and operational responsibilities.

Prospective franchisees should carefully consider these definitions and their implications, especially if they plan to bring in partners or investors. Understanding who qualifies as an 'Owner' and the responsibilities attached to that designation is crucial for ensuring compliance with the franchise agreement and avoiding potential disputes.