Does the Approved Suppliers and Approved Supplies List apply to Subfranchises of Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
We provide you with a list of approved manufacturers, suppliers, and distributors ("Approved Suppliers List") and approved inventory products, fixtures, furniture, equipment, signs, stationery, supplies and other items or services necessary to operate the Master Franchised BHC Restaurant ("Approved Supplies List").
The Approved Suppliers and Approved Supplies List are not specific to the operation of a Subfranchise.
We and the Approved Suppliers may make changes to the prices, delivery terms, and other terms relating to their respective sale of Approved Supplies to you, your Affiliate Franchisee and/or your Subfranchisees on 30 days' notice to you.
Except where we identify a sole single source, if you, your Affiliate Franchisee and/or your Subfranchisees propose to use in the operation of your Affiliate Franchisee and/or your Subfranchisee's BHC Restaurant any product, supply, material, furnishing or equipment which has not yet been approved by us as conforming to our specifications and quality and system standards ("Alternative Supplies") and/or from a supplier not yet approved in writing by us ("Alternative Supplier"), you must first notify us in writing and must submit to us, upon request, sufficient information, specifications, and samples so that we can determine whether the item or service complies with System standards or the supplier meets our supplier criteria.
We and our affiliates have the right to receive payments, rebates, and other forms of consideration from suppliers based upon your, your Affiliate Franchisee and your Subfranchisees (and other franchisees') purchases of goods, products, and services as described in this Item 8, as well as in connection with any future purchases of any goods, products, and services. Most of these payments are calculated as an amount based on products sold to you, your Affiliate Franchisee and your Subfranchisees.
We do not provide material benefits to you, your Affiliate Franchisee, or your Subfranchisees based on your, your Affiliate Franchisee's, or your Subfranchisees' use of designated Approved Suppliers but doing so is one of your obligations under the MFA and we may either require you, your Affiliate Franchisee and your Subfranchisees to purchase replacement products from a designated Approved Supplier or terminate your MFA if you purchase from unapproved sources in violation of your MFA.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 25–28)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Approved Suppliers and Approved Supplies List applies to Subfranchisees. To maintain uniformity and quality across the Bhc system, franchisees, affiliate franchisees, and subfranchisees must adhere to Bhc's standards. Bhc provides a list of approved manufacturers, suppliers, and distributors, as well as a list of approved inventory products, fixtures, furniture, equipment, signs, stationery, supplies, and other necessary items. These lists are referred to as the "Approved Suppliers List" and "Approved Supplies List."
The Approved Suppliers and Approved Supplies List are not specific to the operation of a Subfranchise. Bhc retains the right to designate required supply sources for certain products and supplies, with Bhc or its affiliates potentially serving as required sources. Bhc may revise these lists and will provide 30 days' notice for changes to prices, delivery terms, and other terms related to the sale of approved supplies to franchisees, affiliate franchisees, and subfranchisees.
If a franchisee, affiliate franchisee, or subfranchisee proposes to use alternative supplies or suppliers not yet approved by Bhc, they must notify Bhc in writing and submit sufficient information for evaluation. Bhc will provide written approval or disapproval within a reasonable time, typically 30 days. The use of any unapproved product, supply, material, furnishing, or equipment is prohibited. Supplier approval depends on factors such as product quality, delivery reliability, service standards, financial capability, customer relations, and willingness to provide consideration to Bhc or its affiliates. Bhc may inspect supplier facilities and products and revoke approval if criteria are not met.
Bhc also has the right to receive payments, rebates, and other forms of consideration from suppliers based on purchases made by franchisees, affiliate franchisees, and subfranchisees. These payments are typically calculated based on products sold. While Bhc may negotiate prices for numerous products for the benefit of the system, it does not do so on behalf of individual franchisees. Currently, there is no purchasing or distribution cooperative, but Bhc reserves the right to create one and require participation. Franchisees, affiliate franchisees, and subfranchisees may not receive material benefits beyond volume discounts for using approved suppliers, but compliance with approved suppliers is an obligation under the MFA, and failure to comply may result in required purchases from designated suppliers or termination of the MFA.