What is the significance of the office lease agreement for Beard Papas?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
-------|-----------| | place of business located at (the "Landlord") and, a with a | | | | principal place of business located at (the "Tenant"). | | | | WHEREAS, the lease relates to the following commercial premises (the "Leased Premises"): | | | | | | | | | | | | WHEREAS, Muginoho International, Inc. | (the "Franchisor") is the franchisor of the Beard Papa's | franchise | | system (the "Beard Papa's | | | | Franchise System"); | | | | WHEREAS, Franchisor's mailing and notice address (the "Notice Address") is 11443 South Street Suite | | |
A-7, Cerritos, California 90703;
WHEREAS, the Beard Papa's Franchise System relates to and includes shops featuring fresh and natural cream puffs and a limited selection of other desserts and beverages and other menu items that the Franchisor authorizes under the "Beard Papa's" name and marks (the "Intended Use");
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.
- Upon the occurrence of (a) the termination, for any reason, of the Franchise Agreement; (b) the expiration, without renewal, of the Franchise Agreement; (c) Franchisor's exercise of Franchisor's Right of First Refusal granted to Franchisor in the Franchise Agreement; (d) Tenant's default under the terms of the Lease;
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, the Lease Agreement Rider is crucial for protecting Beard Papas' interests in the event of a franchisee's lease issues or franchise termination. The rider, which supplements and amends the lease, ensures that the terms favor Beard Papas in case of conflicts. Landlords and tenants must acknowledge that the rights outlined in the rider cannot be reduced, modified, or altered without the express written consent of Beard Papas. This provision ensures that Beard Papas maintains control over key aspects of the leased premises.
One significant aspect of the Lease Agreement Rider is the control Beard Papas retains over the transfer or assignment of the lease. A franchisee cannot transfer, sublease, encumber, or assign their interests in the lease without prior written consent from Beard Papas. If a franchisee seeks the landlord's consent for any such changes, the landlord must condition their approval on the franchisee also obtaining written consent from Beard Papas. This protects Beard Papas by ensuring that the location remains under an approved operator, maintaining brand consistency and standards.
Furthermore, the Lease Agreement Rider provides Beard Papas with the option to assume or renew the lease under certain circumstances, such as termination or expiration of the Franchise Agreement, the franchisee's default, or failure to exercise an option period. Beard Papas has the right, but not the obligation, to assume the lease and sublease the premises to another franchisee within the Beard Papa's system. If Beard Papas assumes the lease and subsequently assigns it to an approved franchisee, Beard Papas is not responsible for obligations arising after the assignment. The landlord's consent is not required for the assignment or assumption of the lease by Beard Papas, and no assignment fees or rent increases can be imposed as a result. This clause provides Beard Papas with a safety net, allowing them to maintain control of strategic locations and ensure continuity of the franchise system.