While operating a Beard Papas franchise, what activities are considered 'Prohibited Activities'?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or customers from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Beard Papa's Shop; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and, collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and, would cause harm to Franchisor, the System and other Beard Papa's Shop franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, 'Prohibited Activities' are specific actions a franchisee must avoid during the term of their agreement. These restrictions are designed to prevent unfair competition and protect the Beard Papas brand.
Specifically, a franchisee is prohibited from owning or having a legal or equitable interest in a Competitive Business, whether as a sole proprietor, owner, partner, member, or shareholder of a corporation. However, owning 3% or less of a publicly traded company that is a Competitive Business is an exception. Franchisees also cannot operate, manage, fund, or perform services for a Competitive Business as an employee, officer, director, manager, consultant, representative, agent, or creditor.
Furthermore, franchisees are not allowed to divert or attempt to divert business or customers from Beard Papas, its affiliates, or other franchisees. Inducing any customer or client of Beard Papas, its affiliates, franchisees, or the franchisee themselves to another business that is not a Beard Papa's Shop is also prohibited. Engaging in any actions, inactions, and/or activities that violate specific articles related to the agreement are also considered 'Prohibited Activities'. These restrictions also apply to the franchisee's owners and spouses, who must sign an agreement to that effect.