Does Beard Papas have an option to purchase the franchisee's business?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
| q. Non-competition covenants during the term of the franchise | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
|---|---|---|
| r. Non-competition covenants after the franchise is terminated or expires | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
| s. Modification of the agreement | 5.3, 7.11 | Only by written agreement between you and us or if governing law requires a modification. We can change the form of the Franchise Agreement for future Shops which will not alter your obligations under the Multi- Unit Development Agreement. |
| t. Integration/merger clauses | 7.12 | The Multi-Unit Development Agreement is the entire agreement between you and us relating to the development of the Exclusive Territory. Notwithstanding the foregoing, nothing in any agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. Subject to state law. |
| u. Dispute resolution by arbitration or mediation | 7.5, 7.6 | Except for certain claims for injunctive relief, all disputes must first be submitted to non-binding mediation in Los Angeles County, California and, if mediation is unsuccessful, then to binding arbitration in Los Angeles County, California. This provision is subject to applicable state law. |
| v. Choice of forum | 7.5, 7.6 | All mediation, arbitration and, if applicable, litigation proceedings must be conducted in, or closest to, State court of general jurisdiction that is within or closest to Los Angeles County, California or, if appropriate, the United States District Court nearest to our corporate headquarters at the time such action is filed. This provision is subject to applicable state law. |
| w. Choice of law | 7.5, 7.6 | California law will govern. However, this provision is subject to state law and as otherwise disclosed in Exhibit I to this Disclosure Document. |
| m. | Conditions for franchisor's approval of transfer | 14.C. |
| n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. |
| o. | Franchisor's option to purchase | Not |
| franchisee's business | applicable |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–51)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, under Item 17 regarding renewal, termination, transfer, and dispute resolution, the franchisor's option to purchase the franchisee's business is 'Not applicable.' This means that Beard Papas does not have a contractual option to buy back a franchise location from the franchisee.
However, the FDD also indicates that Beard Papas does have a 'Franchisor's right of first refusal to acquire franchisee's business.' This means that if a franchisee decides to sell their Beard Papas business to a third party, the franchisee must first offer Beard Papas the opportunity to purchase the business on the same terms as the proposed sale. Beard Papas can then choose to exercise their right of first refusal and buy the business themselves, preventing the sale to the third party.
This right of first refusal is a fairly common provision in franchise agreements, as it allows the franchisor to maintain control over the brand and the selection of franchisees within their system. A prospective franchisee should carefully consider the implications of this provision, as it could limit their ability to sell the business to a buyer of their choice.