According to the Bhc franchise agreement, what does the term 'Affiliate' mean?

According to Bhc's 2025 Franchise Disclosure Document, an 'Affiliate' refers to any person or entity that directly or indirectly controls, is controlled by, or is under common control with a party involved in the franchise agreement, potentially through one or more intermediaries. This definition is crucial for understanding the scope of rights, restrictions, and obligations within the franchise system.

For a prospective Bhc franchisee, this definition has several implications. It clarifies that the franchisor's control extends not only to the franchisee but also to any entities affiliated with them. This could impact various aspects of the business, including compliance with brand standards, financial reporting, and adherence to operational guidelines. The franchisee needs to be aware that actions taken by their affiliates could have consequences under the franchise agreement.

Furthermore, the definition of 'Affiliate' is relevant in the context of subfranchising. If a master franchisee intends to appoint a subfranchisee who is an affiliate, Bhc retains the right to approve the potential subfranchisee and their restaurant location. This ensures that all parties operating under the Bhc brand, even those indirectly connected to the master franchisee, meet the franchisor's standards. Master franchisees are also required to establish and operate at least one affiliate-owned Bhc restaurant before granting subfranchises to third parties.

Understanding the 'Affiliate' definition is essential for franchisees to navigate their relationships with related entities and to ensure compliance with the franchise agreement. It is a common term in franchise agreements, but the specific implications can vary, so careful review is always recommended.