Does the 'Additional Funds' estimate for a Bhc franchise include compensation for the franchisee during the first 3 months?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
hisee will need to provide monies for deposits for utilities.
- (11) Additional Funds. This item estimates the Affiliate Franchisee minimum expenses during the initial period (first three months) of operation of the Affiliate Franchised BHC Restaurant (other than the items identified separately in the table). In compiling these estimates, we rely on the experience of our affiliate in the leasehold improvement and development of BHC Restaurants. These amounts are the minimum recommended levels to cover the Affiliate Franchisee's operating expenses for 3 months, including rent, utilities, wages, and payroll expenses for a minimum staff. However, we cannot guarantee that such an amount will be sufficient. The estimate of additional funds does not include an owner's salary or draw, or any financing costs if the Affiliate Franchisee has borrowed any funds to begin the Affiliate Franchisee's business. The additional funds required will vary by the Affiliate Franchisee's area; how much the Affiliate Franchisee follows our methods and procedures; the Affiliate Franchisee's management skills, experience, and business acumen; the relative effectiveness of the Affiliate Franchisee's staff; local economic conditions; the local market for the Affiliate Franchisee's products and services; the prevailing wage rate; competition; and the sales level reached during the initial period. The Affiliate Franchisee must provide security deposits for utilities and rent (and possibly for other items).
- (12) Total. This total is an estimate of the initial investment and the estimated expenses that the Affiliate Franchisee will incur during the first 3 months of its operation of the first Affiliate Franchised BHC Restaurant with the Development Area.
Item 8: Restrictions on Sources of Products and Services
You must, and ensure that your Affiliate Franchisee and your Subfranchisees: (i) advertise, sell, and serve all and only the products we authorize; (ii) purchase, and maintain inventory as needed to meet reasonably anticipated consumer demand of the BHC Products; and 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 a Master Franchised BHC Restaurant ("Ancillary Products").
Source: Item 7 — Estimated Initial Investment: (FDD pages 18–25)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the 'Additional Funds' estimate for an Affiliate Franchised Bhc Restaurant does not include an owner's salary or draw during the initial 3-month period of operation. The estimate is designed to cover expenses such as rent, utilities, wages, and payroll expenses for a minimum staff.
This means that prospective Bhc franchisees should plan to have separate funds available to cover their personal living expenses during the initial months, as the business's operational funds are not intended for this purpose. The FDD explicitly states that Bhc cannot guarantee the provided amount will be sufficient, as the actual additional funds required can vary significantly based on factors like the franchisee's location, adherence to Bhc's methods, management skills, local economic conditions, and sales levels achieved during the initial period.
For Master Franchise Businesses, the additional funds estimate also excludes the franchisee's compensation during the first 3 months. This estimate is intended to cover expenses such as employee salaries and benefits, telephone and internet access fees, subscription fees, taxes, miscellaneous supplies, and interest payments on any business loans. As with the Affiliate Franchise, Bhc notes that these are estimates and actual costs may vary based on factors like adherence to Bhc's systems, management skills, economic conditions, and competition.