Does Beard Papas have the right of first refusal to purchase the assets of a Beard Papas franchise?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, Tenant is a franchisee of Franchisor pursuant to the terms of a Franchise Agreement entered into between Franchisor and Tenant (the "Franchise Agreement") and the Leased Premises is to be used and operated by Tenant for the purpose of developing, establishing and operating a Beard Papa's Shop in accordance with the Beard Papa's franchise system; and
WHEREAS, Franchisor and Franchisor's successors and assigns (collectively referred to as "Franchisor") is/are intended third party beneficiaries of this Rider.
NOW THEREFORE, Landlord and Tenant acknowledge and agree to the following:
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- This Rider supplements and amends the Lease. In the event of any inconsistency or conflict between the terms of this Rider and the Lease, the terms of this Rider shall prevail. Landlord and Tenant acknowledge that the rights set forth in this Rider may not be reduced, modified or altered without the express written consent of Franchisor.
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- Landlord and Tenant both agree that Tenant shall not be permitted to transfer, sublease, encumber and/or otherwise assign Tenant's interests in the Lease and/or the Leased Premises without the prior written consent of Franchisor. Without limitation to the foregoing, among other things, Tenant agrees that if Tenant wishes to transfer any interests in the Lease or the Leased Premises that Tenant must request the written
consent of Franchisor. If Tenant requests Landlord's consent to Tenant's amendment, transfer and/or assignment of Tenant's interests in the Lease and/or the Leased Premises and if Landlord is inclined to approve of such amendment, transfer and/or assignment that Landlord shall condition Landlord's approval upon Tenant also obtaining written consent from Franchisor.
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 a right of first refusal related to the franchise. Specifically, if a franchisee wishes to transfer any interests in the lease or the leased premises, they must request written consent from Beard Papas. If the landlord is inclined to approve such a transfer or assignment, they must condition their approval upon the franchisee obtaining written consent from Beard Papas. This clause ensures that Beard Papas retains control over who operates a franchise location and maintains brand standards.
This right of first refusal on lease transfers gives Beard Papas significant control over the location of its franchises. If a franchisee wants to sell or transfer their location, Beard Papas has the first opportunity to decide who will take over the lease. This prevents franchisees from transferring the lease to someone Beard Papas does not approve of, allowing Beard Papas to maintain its brand image and operational standards.
For a prospective franchisee, this means that exiting the business by selling the location may be subject to Beard Papas's approval. While this could potentially complicate a sale, it also provides some assurance that Beard Papas is invested in maintaining the quality and consistency of its brand. Franchisees should carefully consider this provision and discuss with Beard Papas the criteria they use to evaluate potential transferees to fully understand the implications.