Can Beggars Pizza reduce the scope of the non-compete covenants without the franchisee's consent?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.3.5 That (a) (i) the transferee (and if the transferee is other than an individual, such owners of a beneficial interest in the transferee as Franchisor may request) enters into a written assignment, in a form satisfactory to Franchisor, assuming and agreeing to discharge all of Franchisee's obligations under the Agreement, or (ii) the transferee executes, for a term ending on the expiration date of the Agreement and with such renewal terms as may be provided by the Agreement, Franchisor's then-current form of franchise agreement and other ancillary agreements as Franchisor may require for the Restaurant, which agreements will supersede the Agreement in all respects, and the terms of which may differ from the terms of the Agreement including, without limitation, a higher royalty fee and advertising contribution and a smaller or modified Franchisee's Territory, except that transferee will not be required to pay any initial franchise fee, and (b) the transferee or its principals guarantee the performance of all such obligations in writing in a form satisfactory to Franchisor;
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
Based on the 2025 Beggars Pizza Franchise Disclosure Document, the franchisor can modify the franchisee's territory under specific conditions related to a transfer of the franchise. Specifically, if a franchisee transfers the franchise to a new owner, Beggars Pizza can require the new owner to sign its then-current franchise agreement.
According to the FDD, the terms of the new agreement may differ from the original agreement, potentially including a smaller or modified franchisee territory. This change can occur without the original franchisee's consent as a condition of approving the transfer to the new franchisee. However, the new franchisee will not be required to pay any initial franchise fee.
This condition is part of Beggars Pizza's rights when approving a transfer of ownership. It allows Beggars Pizza to update the franchise agreement to its current standards, which may include changes to the territory. A prospective franchisee should consider this when evaluating the long-term value and potential sale of their Beggars Pizza franchise.