Are the rights granted to a Beard Papas franchisee in Article 2.A exclusive?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
interests or to control the operations or affairs of Franchisee; and/or (e) the legal and/or equitable transfer and/or sale of an Owner's interests and/or voting rights in Franchisee.
"Transfer Fee" shall have the meaning defined in Article 14.C.(11) of this Agreement. The Transfer Fee is a fixed sum of $15,000.
ARTICLE 2 GRANT OF FRANCHISE
2.A. GRANT OF FRANCHISE
Franchisee has requested that Franchisor grant to Franchisee the non-exclusive license and right to develop, own and operate a Beard Papa's Shop from a fixed Shop Location located within a specified territory. Relying on the representations made by Franchisee and/or Franchisee's Owners in any submitted application and during the application process, and subject to the terms and conditions of this Agreement, Franchisee's request has been approved by Franchisor, subject to the following terms and conditions:
- (1) During the Term of this Agreement and subject to the rights of Franchisor including, but not limited to, the Reserved Rights, Franchisor grants to Franchisee and Franchisee accepts, the nonexclusive license, right and obligation to develop and operate, one Beard Papa's Shop in conformity with the System and this Agreement from a single fixed shop location, selected by Franchisee but requiring the approval of Franchisor ("Franchisee's Shop Location") and, as designated by Franchisor in Franchisor's discretion and Reasonable Business Judgment, within a Designated Territory;
- (2) If, as of the Effective Date, Franchisee has selected a proposed Shop Location that Franchisor approves as Franchisee's Shop Location, then Franchisee's Shop Location and Designated Territory, if any, shall be identified in Schedule 1 of this Agreement. To be effective, Schedule 1 must be completed and signed by Franchisor. Franchisee's execution of Schedule 1 with a specific location for Franchisee's Shop Location shall constitute Franchisee's obligation to develop and operate the Franchised Business at the designated Franchisee Shop Location;
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, the rights granted to a franchisee in Article 2.A are explicitly non-exclusive. The document states that the franchise granted is a "non-exclusive license and right to develop, own and operate a Beard Papa's Shop." This means that Beard Papas retains the right to operate or franchise other shops, potentially in the same general area as a franchisee's location.
This non-exclusivity is further reinforced by the statement that the rights granted in Article 2.A are "subject to and contingent upon each and every, term and condition of this Agreement, the rights of any prior user, and are non-exclusive and subordinate to the Reserved Rights." The Reserved Rights allow Beard Papas to engage in activities that might compete with a franchisee's business, such as operating shops outside the franchisee's designated territory, using alternative channels of distribution, or operating in Captive Markets.
Furthermore, the FDD clarifies that a franchisee may face competition from other Beard Papa's shops and System franchisees, including those in close proximity or within Closed Markets. The franchisee also acknowledges that Beard Papas is not obligated to prevent other franchisees from marketing within their designated territory through various mediums like the internet or third-party delivery services. This lack of territorial exclusivity is a significant factor for potential franchisees to consider, as it means they may face direct competition from other Beard Papas locations, impacting their potential customer base and revenue.