When does Beard Papas satisfy its performance obligations related to franchise fees?

According to the 2025 Beard Papas Franchise Disclosure Document, Beard Papas does not require or accept payment of any initial franchise fees until the franchisee has received all pre-opening and initial training obligations they are entitled to under the franchise agreement or offering circular, and is open for business. This means Beard Papas recognizes the franchise fee revenue proportionally as each franchise outlet opens, and only after they have fulfilled their pre-opening obligations.

For franchisees entering into a Multi-Unit Development Agreement with Beard Papas, the payment of the franchise fee will be released proportionally with respect to each franchise outlet opened. This is contingent upon Beard Papas meeting all its pre-opening obligations under the agreement and the franchisee being open for business at each location. This approach ensures that franchisees only pay for the value they receive, as Beard Papas completes its obligations for each specific location.

This policy of not impounding franchise fees and releasing them proportionally as obligations are met is a benefit for franchisees. It reduces the upfront financial burden and aligns the franchisor's interests with the franchisee's success. Franchisees should confirm during their due diligence that the pre-opening obligations are clearly defined and that the timeline for meeting these obligations is reasonable.