Under what conditions can Beard Papas engage in activities described as 'Reserved Rights'?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates reserve to ourselves the exclusive right on any and all terms and conditions that we deem advisable and, without any compensation or consideration to you (Franchise Agreement, Article 2.D. and Multi-Unit Development Agreement, Section 2.3), to engage in the following activities (our "Reserved Rights"): (a) operate and grant to others the right to develop and operate Shops and Franchised Businesses using the System and Licensed Marks at locations outside your Designated Territory and, if applicable, Development Area, as we deem appropriate and irrespective of the proximity to your Designated Territory and, if applicable, Development Area; (b) acquire, develop, merge with or otherwise affiliate with one or more businesses of any kind, including businesses that offer and sell products and services that are the same as, or similar to, the Franchised Business, and after such acquisition, merger or affiliation to own and operate and to franchise, or license others to own and operate and to continue to own and operate such businesses of any kind, even if such businesses offer and sell products and services that are the same as or similar to a the Franchised Business but, not using the Licensed Marks, within your Designated Territory and, if applicable, within your Development Area; (c) be acquired by or merge with or otherwise affiliate with one or more businesses of any kind, including businesses that offer and sell products and services that are the same as or similar to the Franchised Business, even if such business or businesses presently or, in the future, own and operate and franchise or license others to own and operate businesses that offer and sell products and services that are the same as or similar to the Franchised Business but, not using the Licensed Marks, within your Designated Territory and, if applicable, your Development Area; (d) use the Licensed Marks and System to distribute the Approved Services and Products offered and sold by the Franchised Business or products and services similar to the Approved Services and Products offered and sold by the Franchised Business in alternative channels of distribution including wholesale, retail, and/or internet based, supermarkets, grocery stores, wholesale stores, internet/web based sales, and other outlets, within or outside your Designated Territory and, if applicable, your Development Area; (e) operate, and grant to others the right to own and operate, a Shops within or at captive market locations including, but not limited to, indoor malls, airports, transportation stations, factories, government facilities, military bases, hospitals, amusement parks, recreational parks or facilities, sports facilities, convention centers, travel centers, schools, colleges and other academic facilities, seasonal facilities, shopping malls, theaters, workplace cafeterias, hotels, and venues where food service is administered or provided as a concession by a master concessionaire, both within and outside your Designated Territory and, if applicable, your Development Area; and (f) use the Licensed Marks and System and to license others to use the Licensed Marks and System, to engage in all other activities not expressly prohibited by the Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 38–40)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, Beard Papas retains specific 'Reserved Rights' that allow them to operate and expand their business without providing compensation or consideration to franchisees. These rights are extensive and cover various activities that could potentially impact a franchisee's business.
Beard Papas reserves the right to operate and grant franchises to others outside a franchisee's Designated Territory or Development Area, regardless of proximity. They can also acquire, develop, merge with, or affiliate with other businesses, even those offering similar products or services, as long as they don't use Beard Papas's Licensed Marks within the franchisee's territory. Additionally, Beard Papas can be acquired by or merge with other businesses, even those that compete with the franchise, provided they don't use the Licensed Marks in the franchisee's area.
Furthermore, Beard Papas can use their Licensed Marks and System to distribute approved products through alternative channels like wholesale, retail, internet, supermarkets, and other outlets, both within and outside a franchisee's territory. They also reserve the right to operate or franchise shops in captive market locations such as malls, airports, and amusement parks, again without compensating the franchisee. Finally, Beard Papas can use the Licensed Marks and System for any activities not expressly prohibited in the Franchise Agreement.
These reserved rights significantly impact a franchisee, as Beard Papas can engage in activities that directly compete with or affect the franchisee's market without any obligation to provide compensation. This lack of territorial exclusivity and the broad scope of reserved rights represent a significant risk for potential franchisees, as Beard Papas retains considerable control over market development and competition.