Under what conditions will a Beard Papas franchise agreement be automatically terminated without notice?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Shops within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of Beard Papa's Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Development Shop and/or any other Franchise Agreement between Franchisor and Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, the franchise agreement can be terminated automatically by the franchisor without notice to the franchisee under specific circumstances. These circumstances include if the franchisee abandons their obligations under the agreement, indicating they no longer intend to fulfill their duties.
Another condition for automatic termination is if the franchisee becomes insolvent, is adjudicated bankrupt, takes action under any insolvency, bankruptcy, or reorganization act, makes an assignment for the benefit of creditors, or has a receiver appointed. This protects Beard Papas from franchisees who are unable to manage their finances.
Additionally, Beard Papas can automatically terminate the agreement if the franchisee fails to meet their development obligations under the Development Schedule, such as not establishing, opening, or maintaining the required number of Beard Papa's shops. Finally, if any single franchise agreement is terminated concerning any Development Shop or any other franchise agreement between Beard Papas and the franchisee, all agreements can be automatically terminated.