What approval process must the Master Franchisee conduct before appointing any Subfranchisee for a Bhc restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
and conditions of any individual Franchise Agreement or of any other agreement to which Master Franchisee and Franchisor or its affiliates are parties.
3.2 Subfranchise Rights and Obligation.
- (a) Prior to appointing any Subfranchisee, including an affiliate of Master Franchisee, Master Franchisee shall conduct an approval process to confirm that each potential Subfranchisee and each potential Subfranchised BHC Restaurants meets all of Franchisor's then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by Franchisor from time to time. Franchisor also reserves the right to approve any or all potential Subfranchisees and potential BHC Restaurants. Each potential Subfranchisee that Master Franchisee approves and Franchisor approves, to the extent Franchisor exercises its approval right, shall be referred to herein as a "Subfranchisee." For purposes of clarification, Master Franchisee may not directly operate BHC Restaurants under this Agreement, but may only do so through an Affiliate Franchisee that enters into a then-current Subfranchise Agreement with Master Franchisee. An "Affiliate Franchisee" means in relation to a Master Franchisee, any person controlling, controlled by or under common control with Master Franchisee, either directly or indirectly through one or more intermediaries. In addition, Master Franchisee must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before Master Franchisee may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area. To the extent Franchisor exercises its approval rights under this paragraph, Franchisor's approval of any potential Subfranchisee or potential BHC Restaurant is in no way a guarantee as to the success of that potential Subfranchisee or potential BHC Restaurant, but only an indication that the potential Subfranchisee or potential BHC Restaurant generally meets Franchisor's then-current minimum requirements.
- (b) Once a Subfranchisee and a potential BHC Restaurant have been approved pursuant to the approval process described in paragraph 2(b), Master Franchisee shall enter into a Subfranchise Agreement in relation to the relevant approved BHC Restaurant with the relevant Subfranchisee in the form approved by Franchisor, including only such amendments to such form as approved by Franchisor in writing (such executed agreement, "Subfranchise Agreement").
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee must conduct an approval process before appointing any Subfranchisee. This process is to confirm that each potential Subfranchisee and their Bhc restaurant meets all of Bhc's current minimum requirements for new subfranchisees and restaurants. These requirements may be amended or supplemented by Bhc from time to time. Bhc also retains the right to approve any or all potential Subfranchisees and restaurant locations.
Once a Subfranchisee and restaurant have been approved by both the Master Franchisee and Bhc (if Bhc exercises its approval right), the Master Franchisee must enter into a Subfranchise Agreement with the Subfranchisee. This agreement must be in a form approved by Bhc, including any amendments that Bhc has approved in writing. Prior to using any Subfranchise Agreement or other related agreements for the first time, the Master Franchisee must submit the proposed form to Bhc for approval.
Furthermore, once a form Subfranchise Agreement or Other Agreement has been approved, the Master Franchisee cannot modify the terms without prior written approval from Bhc. The Subfranchise Agreement and Other Agreements must include terms and conditions consistent with the Master Franchise Agreement and as prescribed by Bhc, including the maximum territory size granted under any Subfranchise Agreement. Executed copies of each Subfranchise Agreement and any related Other Agreements must be sent to Bhc before the Subfranchised Bhc Restaurant opens for Bhc's records, with copies of Other Agreements sent within thirty days of execution.