What does Beard Papas require franchisees to do with the Gross Sales of their Shop?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. If you enter into a Multi-Unit Development Agreement or open multiple Shops then these fees shall apply, respectively, to each and every Shop. Payment is subject to our specification and instruction, including, our election to have all fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 7) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Shop into the designated bank accounts that are subject to our ACH authorization. You must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate and require in the operation of your Shop. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, franchisees are required to deposit the Gross Sales of their Shop into bank accounts designated and authorized by Beard Papas for ACH (Automated Clearing House) transactions. This allows Beard Papas to electronically debit the franchisee's account for fees payable to them or their affiliates. Franchisees must also install and use pre-authorized payment, point-of-sale, credit card processing, automatic payment, automated banking, electronic debit, and/or electronic funds transfer systems that Beard Papas designates.
In addition to depositing gross sales into designated accounts, franchisees must ensure they pay all service charges and fees charged by their bank to allow Beard Papas to electronically debit their account. This requirement ensures that Beard Papas can collect royalty fees, brand development fund fees, and other charges without issues. The royalty fee is 5% of monthly Gross Sales, and the Brand Development Fund is up to 2% of Gross Sales. Franchisees are also required to spend at least 2% of monthly Gross Sales on local marketing.
This arrangement gives Beard Papas significant control over the franchisee's funds, as they can directly access the account to collect fees. Franchisees need to budget carefully to ensure sufficient funds are always available to cover these deductions. The definition of Gross Sales is broad, including all revenues from any source, which means franchisees must accurately track all sales, including non-cash transactions, to calculate the fees owed to Beard Papas. Failure to comply with these requirements can result in penalties and potential breaches of the franchise agreement.