What are Affiliate Franchised Bhc Restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
are defined below).
Under the MFA, you will be granted the right and license: (i) to grant subfranchises for the establishment and operation of BHC Restaurants, as defined below, within the Development Area ("Development Rights") to third party subfranchisees that meet our requirements ("Subfranchisees") by entering into Subfranchise Agreements (as defined below) ("Subfranchised BHC Restaurants"); and (ii) to directly own and operate through an affiliate of the Master Franchisee ("Affiliate Franchisee") ("Affiliate Franchised BHC Restaurants") within the Development Area once opened, and to support, and receive fees from, as applicable, all Master Franchised BHC Restaurants within the Development Area once opened ("Operating Rights").
"BHC Restaurant(s)" means a single retail dine-in, carry-out, drive-thru, and delivery restaurant, serving classic Korean flavor fried chicken (e.g., Korean cheese seasoning, Korean soy sauce, sweet & spicy sauce), sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories, using designated concepts, designs, recipes, authorized equipment, and techniques.
"BHC Products" mean any product or service we authorize to be provided at BHC Restaurants under the System, as we may amend from time to time, with the understanding that any such products and services, including pre-packaged or ready-to-drink products and/or related merchandise or services, may only be offered to Affiliate Franchisees and Subfranchisees located within the Development Area, and not through any other distribution channels.
Source: Item 1 — The Franchisor, And Any Parents, Predecessors, And Affiliates (FDD pages 7–10)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, an Affiliate Franchised Bhc Restaurant is a Bhc Restaurant that is established and operated by an affiliate of the Master Franchisee. The Master Franchisee does not directly operate any Bhc Restaurant under the Master Franchise Agreement (MFA) but may do so through an affiliate that enters into a Franchise Agreement with Bhc. The Master Franchisee has the right to directly own and operate Affiliate Franchised Bhc Restaurants within the Development Area through an affiliate.
In order to maintain Development Rights under the MFA, the Master Franchisee must establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area pursuant to a separate then-current Franchise Agreement before granting subfranchises to third parties for the establishment and operation of Subfranchised Bhc Restaurants within the Development Area. The Master Franchisee must also establish and operate the cumulative number of Master Franchised Bhc Restaurants (including Affiliate Franchised Bhc Restaurants and Subfranchised Bhc Restaurants) in the Development Area by the dates specified in the applicable development schedule.
Prospective Master Franchisees should note that they are required to prepare and disclose to prospective subfranchisees, including their affiliates, a separate disclosure document that details the offer of unit franchises for Bhc Restaurants. This means that even if the affiliate is operating the restaurant, they are still considered a subfranchisee and must receive the same disclosures as any other potential subfranchisee. This ensures transparency and compliance with franchise laws.