According to Bhc, what constitutes a 'Prohibited Person'?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
The Prospective Franchisee represents, warrants and covenants to BHC USA LLC ("BHC") that all of the following matters are true and accurate as of the date of execution of this Acknowledgment and Authorization for Background Check ("Acknowledgment"):
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- No Prospective Franchisee and his/her/its Affiliates (as that term is defined below) had or has any relationship, affiliation, or ownership interest, directly or indirectly, with BHC USA or its Affiliates ("Prohibited Persons"). "Affiliates" mean a party's respective present and former, direct and indirect, parents, subsidiaries, employees, officers, directors, shareholders, managers, members, agents, representatives, and spouses (for individuals), including any other person directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such person. "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.
The Prospective Franchisee has not made nor is making any act of providing money, goods, gifts, entertainment or other monetary or non-monetary benefits to any of the Prohibited Persons (including, but not limited to, the provision of rebates/back margins, granting of an opportunity to acquire intermediate margin, lending of money, reduction of debt, provision of collateral, provision of transaction/investment opportunities, job placement, high-price purchase/lowprice sale, etc.).
The Prohibited Persons shall not hold any interest in the Prospective Franchisee nor have any management right, other substantial control, and/or claim against the Prospective Franchisee.
In addition, if the Prohibited Persons have any right or legal relationship with the Prospective Franchisee, claim/debt, employment, delegation, or other right or legal relationship, regardless of whether real name/borrowed name or registered/non-registered, the Prospective Franchisee shall immediately notify BHC in writing.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a 'Prohibited Person' is defined in relation to the prospective franchisee and their affiliations with Bhc USA or its affiliates. Specifically, a 'Prohibited Person' includes Bhc USA LLC and its Affiliates. 'Affiliates' encompass a broad range of relationships, including present and former direct and indirect parents, subsidiaries, employees, officers, directors, shareholders, managers, members, agents, representatives, and spouses (for individuals). The definition also extends to any person or entity that directly or indirectly controls, is controlled by, or is under common control with Bhc USA or its Affiliates. 'Control' in this context means the power to direct the management and policies of a person, whether through ownership of voting securities, by contract, or other means.
Bhc emphasizes that prospective franchisees and their affiliates should not have any existing or past relationships, affiliations, or ownership interests, whether direct or indirect, with Bhc USA or its affiliates. Furthermore, prospective franchisees are prohibited from providing any form of monetary or non-monetary benefits to these 'Prohibited Persons.' This includes, but is not limited to, rebates, back margins, opportunities to acquire intermediate margins, loans, debt reduction, collateral, investment opportunities, job placements, or engaging in high-price purchases or low-price sales.
The FDD also states that 'Prohibited Persons' are not allowed to hold any interest in the prospective franchisee's business, nor can they have any management rights, substantial control, or claims against the prospective franchisee. If any such rights or relationships exist, the prospective franchisee is obligated to immediately inform Bhc in writing, regardless of whether these relationships are formal or informal, registered or unregistered. This comprehensive definition and the associated prohibitions are designed to ensure the independence and integrity of the franchise relationship, preventing conflicts of interest and maintaining the franchisor's control over its brand and operations.