What actions are Bhc master franchisees prohibited from taking regarding the validity of the Marks during and after the franchise term?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Master Franchisee agrees that during the term of the Franchise, and after any assignment, expiration or termination of the Franchise, Master Franchisee will not, directly or indirectly, commit an act of infringement or contest or aid others in contesting the validity, distinctiveness, secondary meaning, ownership or enforceability of the Marks or Intellectual Property, or take any other action in derogation of the Marks or Intellectual Property, and that no monetary amount will be assigned as attributable to any goodwill associated with Master Franchisee's use of the System, the Marks or Intellectual Property.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, master franchisees are prohibited from contesting the validity of Bhc's trademarks and intellectual property. During the franchise term, and even after assignment, expiration, or termination, the master franchisee cannot directly or indirectly infringe upon or contest the validity, distinctiveness, secondary meaning, ownership, or enforceability of the Marks or Intellectual Property. They also cannot assist others in doing so.
This restriction means a Bhc master franchisee is legally bound to respect and uphold Bhc's brand and intellectual property rights. They cannot take any action that could undermine Bhc's legal claim to its trademarks or trade secrets. This obligation extends beyond the duration of the franchise agreement, preventing former franchisees from challenging Bhc's rights after the agreement ends.
Furthermore, the agreement specifies that no monetary amount will be assigned as attributable to any goodwill associated with the master franchisee's use of the System, the Marks, or Intellectual Property. This reinforces that all goodwill generated through the use of Bhc's trademarks belongs solely to Bhc, not the franchisee. This is a common clause in franchise agreements, ensuring the franchisor retains control over its brand and reputation.