What actions constitute a material breach of the Bhc Franchise Agreement regarding the opening of the Franchised Bhc Restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ense, for obtaining all zoning classifications, permits, clearances, certificates of occupancy and center clearances which may be required by governmental authorities and to comply with all covenants, conditions, easements, and restrictions of record.
- (e) Master Franchisee must use licensed general contractors, designers, vendors, and architects accepted by Franchisor before performing leasehold improvement work at Franchised BHC Restaurant. Franchisor expressly disclaims any representation or warranty of the quality of any goods or services provided by architects, contractors, or any other persons or entities which Franchisor may refer to Master Franchisee, including any warranty as to merchantability or fitness for any particular purpose. Franchisor is not responsible for delays in the leasehold improvement, equipping or decoration of the Franchised BHC Restaurant or for any loss resulting from the Franchised BHC Restaurant design or leasehold improvement since Franchisor has no control over the landlord or developer and numerous leasehold improvement-related problems which could occur, consequently delaying the opening of the Franchised BHC Restaurant. Franchisor must approve in writing any and all changes in the Franchised BHC Restaurant plans prior to leasehold improvement of the Franchised BHC Restaurant or the implementation of such changes.
- (f) Franchisor must have access to the Franchised BHC Restaurant while work is in progress. Franchisor may make video records of leasehold improvement in process and may require such reasonable alterations to or modifications in the leasehold improvement of the Franchised BHC Restaurant that Franchisor deems necessary. Master Franchisee's failure to promptly commence and diligently complete the design, leasehold improvement, inventorying, equipping, and opening of the Franchised BHC Restaurant will be a material breach of this Agreement. Before the Franchised BHC Restaurant opens to retail customers and before final inspections by any governmental agency, Franchisor will visit the site of Franchised BHC Restaurant for three (3) on-site visits and complete a final "walk through" inspection of the BHC Restaurant and issue a written consent to open. Any deficiencies noted by Franchisor as a result of this inspection must be corrected by Master Franchisee within 30 days or this Agreement may be terminated without any liability to Franchisor. Master Franchisee shall be responsible for such inspection fee of USD$600, all accommodation, transportation, meals, daily allowances, and other costs and expenses for the Franchisor's personnel in connection with such visits on site but up to three times per Franchised BHC Restaurant only.
- (g) Unless otherwise agreed to in writing by Master Franchisee and Franchisor, Master Franchisee has the sole responsibility for locating, securing, and obtaining suitable premises for the Franchised BHC Restaurant. Master Franchisee and Master Franchisee's landlord will be required by Franchisor to execute an addendum to Master Franchisee's lease (or other written agreement or written understanding incorporated in, or attached as a rider to, the lease) that (i) grants Franchisor an option to assume Master Franchisee's position as lessee under the lease for the Franchised BHC Restaurant premises if Master Franchisee is in material breach of either the lease for the Franchised BHC Restaurant premises (including an obligation of the landlord to notify Franchisor if Master Franchisee is in such breach) or this Agreement, (ii) grants Franchisor the right to assign the lease to a bona fide Master Franchisee of the System after assuming the lease, and (iii) requires the landlord to fully cooperate with Franchisor in completing de-identification of the Franchised BHC Restaurant if this Agreement is terminated or expires without being renewed and Franchisor does not exercise its option to assume the lease for the Franchised BHC Restaurant premises. The Addendum to Lease is attached as Exhibit 5.
(h) Franchisor has the right to regularly inspect Master Franchised BHC Restaurant and any other site where Master Franchisee conducts the Franchised Business.
7.3 Equipment and Inventory.
- (a) Throughout the term of this Agreement, Master Franchisee shall, and ensure that Subfranchisees shall, only purchase, and maintain equipment and inventory as needed to meet reasonably anticipated consumer demand of the BHC Products. Master Franchisee shall, and shall ensure that Subfranchisees shall also purchase and sell ancillary products, which may include books, specialty foods, packaged foods, books, hats, t-shirts, and novelty items, as we periodically specify, for sale at your BHC Restaurant ("Ancillary Products").
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee's failure to promptly commence and diligently complete the design, leasehold improvement, inventorying, equipping, and opening of the Franchised Bhc Restaurant constitutes a material breach of the Franchise Agreement. This means that franchisees must take immediate and consistent action to ensure their restaurant is designed, improved, stocked, equipped, and opened without delay.
Bhc requires franchisees to use licensed general contractors, designers, vendors, and architects accepted by Bhc before performing leasehold improvement work at the Franchised Bhc Restaurant. Additionally, Bhc must approve in writing any and all changes in the Franchised Bhc Restaurant plans prior to leasehold improvement of the Franchised Bhc Restaurant or the implementation of such changes. Bhc also requires access to the Franchised Bhc Restaurant while work is in progress and may make video records of leasehold improvement in process and may require such reasonable alterations to or modifications in the leasehold improvement of the Franchised Bhc Restaurant that Bhc deems necessary.
Before opening to retail customers, Bhc will conduct three on-site visits and a final "walk through" inspection, issuing a written consent to open. Franchisees must correct any deficiencies noted by Bhc within 30 days, or the agreement may be terminated. The franchisee is responsible for a $600 inspection fee, plus all accommodation, transportation, meals, and daily allowances for Bhc's personnel for up to three visits. Unless otherwise agreed, the franchisee is solely responsible for securing suitable premises. For Master Franchisees, a failure to locate a site acceptable to Bhc within four months after the Effective Date can lead to cancellation of the agreement.