What is the significance of Section 3 of the Beard Papas Multi-Unit Development Agreement?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
u should read these provisions in the agreements attached to this Disclosure Document.**
| Provision | Sections in Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | 3 | Varies depending on the number of Shops to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Shop required for development, or the last day of the calendar month in which the final Shop was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
| term | applicable | Agreement. | |
| c. | Requirements for franchisee | Not | There is no renewal of the Multi-Unit Development |
| to renew or extend | applicable | Agreement. | |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi-Unit Development Agreement. Subject to state law. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we |
| without cause | applicable | mutually agree, in writing, to terminate. | |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Shops within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Shop and/or any other Franchise Agreement |
| g. | "Cause" defined curable defaults | Not applicable | Not applicable. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–51)
What This Means (2025 FDD)
According to the 2025 Beard Papas Franchise Disclosure Document, Section 3 of the Multi-Unit Development Agreement outlines the length of the franchise term and the conditions under which the franchisor can terminate the agreement with cause. Specifically, Section 3 addresses both the duration of the agreement and the circumstances that could lead to its termination by Beard Papas due to the franchisee's actions or inactions.
Regarding the length of the franchise term, Section 3 specifies that it varies based on the number of Beard Papas shops to be developed and the designated development area. The agreement begins on the effective date and concludes when the final shop required under the agreement is opened, or on the last day of the month when the final shop was supposed to be opened, whichever comes first. This means a franchisee's development schedule directly impacts the term's length.
Section 3.2 details the conditions under which Beard Papas can terminate the Multi-Unit Development Agreement with cause. These include abandoning obligations, discontinuing shop development for four consecutive months (or a shorter period indicating intent to discontinue), insolvency or bankruptcy, failure to meet development obligations as per the Development Schedule, and termination of any individual Franchise Agreement related to a shop. These termination clauses protect Beard Papas from franchisees who fail to meet their development commitments or face financial instability, ensuring the brand's continued growth and stability. A prospective franchisee should carefully review these conditions to understand their obligations and the potential consequences of non-compliance.