Is notice required for automatic termination of a Beard Papas franchise agreement?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Shops within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of Beard Papa's Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Development Shop and/or any other Franchise Agreement between Franchisor and Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, Beard Papas has the right to terminate the Franchise Agreement without providing an opportunity to cure the default, and such termination becomes effective immediately upon written notice to the franchisee. However, there are also instances where the termination can occur automatically without prior notice.
Specifically, Beard Papas can terminate the agreement automatically if the franchisee abandons their obligations, discontinues shop development for four consecutive months (or a shorter period indicating intent to discontinue), becomes insolvent or bankrupt, makes an assignment for the benefit of creditors, or fails to meet development obligations under the Development Schedule. Additionally, termination of one Franchise Agreement automatically terminates any other Franchise Agreement between Beard Papas and the franchisee.
It is important for a prospective Beard Papas franchisee to understand the conditions under which the agreement can be automatically terminated, as this could result in immediate loss of the franchise without an opportunity to rectify the situation. Franchisees should carefully review the Development Schedule and ensure they can meet their obligations to avoid automatic termination based on development failures.