Are the rights to the Business Management System transferable or assignable to a Beard Papas franchisee?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
17.B. CEASE OPERATIONS AND PROTECTION OF THE SYSTEM
Upon expiration, termination, or Transfer of this Agreement for any reason, Franchisee shall immediately:
- (1) Permanently cease to be a franchise owner of the Shop that was the subject of this Agreement and cease to operate such Shop under the System;
- (2) Directly or indirectly, hold itself out to any person or entity, or represent itself, as a present or former Beard Papa's Shop franchisee;
- (3) Permanently cease to use, in any manner: (a) the System including, without limitation, the Confidential Information, the Licensed Marks, the Business Management System Data, and the Operations Manual; (b) any methods, procedures, or techniques associated with the System in which Franchisor possesses proprietary rights or that constitute Franchisor's trade secrets; (c) System Supplies, including communicating with or ordering products from Franchisor's designated suppliers and vendors of System Supplies; (d) the Approved Services and Products; and (e) any other advertising, marketing, media, and any other information, documents or things associated with Franchisor, the System, the Licensed Marks, Beard Papa's Shops, the Franchised Business, and Franchisee's former Beard Papa's Shop, including, without limitation, any confidential, proprietary methods, procedures, descriptions of products, techniques, trade secrets, recipes, proprietary marks, distinctive forms, slogans, symbols, signs, stationary, advertising material, articles, logos, devices, items and all other things, tangible or intangible, associated with Franchisor, the System, the Licensed Marks, and Beard Papa's Shops;
- (4) Return to Franchisor the Operations Manual (including any and all parts, supplements, and copies of the Operations Manual), the Confidential Information (including without limitation the Business Management System Data and all customer lists and information), and all other confidential materials, equipment, software, information, and property owned by Franchisor and all copies thereof provided, however, that Franchisee may retain Franchisee's copies of this
Agreement, correspondence between Franchisor and Franchisee, but not including Confidential Information that may be contained in or attached thereto, and other documents that Franchisee needs to retain pursuant to applicable law;
[Chunk 4 | Item 23: Receipts] (chunk_id: aca6dc5a-694b-4713-8d0b-cac8839e039d) [Item 23: RECEIPTS]
"Business Management System" refers to and means the software, internet, web based and/or cloud based system or systems, point of sale system or systems and customer relationship management system or systems as same may be individually, or collectively, designated by Franchisor, in Franchisor's Reasonable Business Judgment, as being required for use by the Franchised Business.
"Business Management System Data" refers to and means the forms, data, tools, customer information, inventory, sales, and other information that: (a) is pre-populated or entered into the Business Management System; (b) is entered by Franchisor or Franchisee into the Business Management System; and/or (c) is recorded, stored and/or maintained in connection with the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, the Business Management System is not transferable by the franchisee. Upon termination or transfer of the Franchise Agreement, the franchisee must cease using the Business Management System. The Business Management System is defined as the software, internet, web-based, cloud-based, point of sale, and customer relationship management systems that Beard Papas requires the franchisee to use for the Franchised Business. The Business Management System Data includes forms, data, tools, customer information, inventory, sales, and other information entered into the system.
Upon the expiration, termination, or transfer of the Franchise Agreement, the franchisee must permanently cease using the Business Management System, including all related data and confidential information. The franchisee must also return all confidential materials, equipment, software, and property owned by Beard Papas, including the Business Management System Data. However, the franchisee can retain their copies of the Franchise Agreement and correspondence with Beard Papas, excluding any confidential information.
This means that a new franchisee would need to enter into their own agreement with Beard Papas and would not be able to simply take over the previous franchisee's Business Management System. This ensures that Beard Papas maintains control over its proprietary systems and data and that all franchisees are using the most up-to-date version of the system. This is a fairly standard practice in franchising, as franchisors typically want to maintain control over their systems and protect their confidential information.