What restrictive covenants and obligations must a Beard Papas franchisee comply with upon termination?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) Franchisee's Owners and Spouses and, that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.C. RESTRICTIVE COVENANTS: CONFIDENTIAL INFORMATION
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Confidential Information in any business or capacity other than the Beard Papa's Shop operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, franchisees face several restrictive covenants and obligations that extend beyond the termination of their Franchise Agreement. These primarily revolve around protecting Beard Papas's confidential information and preventing unfair competition.
Specifically, franchisees must not use the 'Know-How'—defined as the knowledge and expertise gained from operating a Beard Papa's shop—in any business other than an authorized Beard Papa's franchise. They are also obligated to maintain the confidentiality of this Know-How, prevent unauthorized copies of related documents, and take steps to prevent its unauthorized use or disclosure. These restrictions apply not only to the franchisee but also to their owners, spouses, directors, officers, employees, and agents who had access to the Know-How.
Similarly, franchisees are prohibited from using 'Confidential Information' in any business other than their Beard Papa's shop and must maintain its confidentiality. These post-termination obligations are designed to protect Beard Papa's business model, trade secrets, and competitive advantage. Failure to comply with these restrictions can result in legal action, including injunctive relief, to prevent further violation of the agreement.
Beard Papas emphasizes that any failure to comply with these restrictive covenants can cause irreparable harm to the franchisor and other franchisees, for which monetary damages may not be sufficient. This underscores the importance of understanding and adhering to these obligations both during and after the franchise term.