What activities are prohibited by the non-competition covenants in the Bhc Multi-Unit Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi-Unit Master Franchise Agreement | Summary |
|---|---|---|
| r. Non-competition covenants during the term of the franchise | 5.1 | No involvement in competing business anywhere. |
| s. Non-competition | 11.1 | No competing business for two years within 25 miles of your Master Franchised BHC Restaurant or any other Master Franchised BHC Restaurant or other retail location (this obligation also applies to you if you assign your franchise). The MFA refers to the confidentiality and non-competition covenant in the last MFA you sign. (This provision is subject to state law.) |
| covenants after | ||
| the franchise is | ||
| terminated or | ||
| expires |
Source: Item 17 — Renewal, Termination, Transfer, And Dispute Resolution (FDD pages 43–49)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the non-competition covenants in the Multi-Unit Master Franchise Agreement (MFA) place restrictions on a franchisee's activities both during the term of the franchise and after its termination or expiration.
During the franchise term, Section 5.1 of the MFA prohibits any involvement in a competing business anywhere. This means that while a franchisee is operating a Bhc franchise, they cannot participate in any other business that competes with Bhc, regardless of location. This is a fairly standard restriction in franchising, designed to protect the brand and prevent franchisees from diverting resources or knowledge to competing ventures.
After the franchise is terminated or expires, Section 11.1 of the MFA imposes a non-compete restriction for two years within 25 miles of the franchisee's Master Franchised Bhc Restaurant, any other Master Franchised Bhc Restaurant, or any other Bhc retail location. This obligation also applies if the franchisee assigns their franchise. It is important to note that this provision is subject to state law, which may affect its enforceability or scope. Franchisees should be aware of these limitations as they plan their future business activities after leaving the Bhc system.
These non-competition covenants are designed to protect Bhc's market share and confidential information. Prospective franchisees should carefully review these sections of the MFA and consider how these restrictions might impact their business opportunities, both during and after the franchise term. It is also advisable to seek legal counsel to understand the enforceability of these covenants in their specific state.