After assigning a Bhc franchise to an Affiliated Entity, can the original franchisee maintain direct ownership and operation of the Bhc restaurants they developed?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Any assignment and transfer by Franchisee of the rights, duties and obligations under this Agreement to an Affiliated Entity must be evidenced by a written instrument, in form reasonably satisfactory to Franchisor, under the terms of which said business entity expressly assumes all of Franchisee's rights, duties, and obligations hereunder, whether accrued at the time of such assignment or arising thereafter, and the assignee agrees to be bound by all the terms and provisions of this Agreement to the same extent and in the same manner as Franchisee is. A copy of said instrument, executed by both Franchisee and said business entity must be delivered to Franchisor before the effective date of the transfer. Franchisee will not be able to maintain direct ownership and operation of the Franchised BHC Restaurants which Franchisee (or its Affiliated Entities) has developed after such assignment.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee is not able to maintain direct ownership and operation of Bhc restaurants they developed after assigning the franchise agreement to an Affiliated Entity. An Affiliated Entity is defined as an entity that is organized to operate as a developer of Franchised Bhc Restaurants and is entirely owned by the franchisee.
To transfer the agreement, the franchisee must provide written notice to Bhc at least 30 days in advance and obtain Bhc's written consent. The assignment and transfer must be documented in a written instrument, in a form reasonably satisfactory to Bhc. This document must stipulate that the Affiliated Entity assumes all of the franchisee's rights, duties, and obligations under the franchise agreement, both those already accrued and those arising in the future. The Affiliated Entity must also agree to be bound by all the terms and provisions of the agreement to the same extent as the original franchisee.
A copy of the executed instrument, signed by both the franchisee and the Affiliated Entity, must be delivered to Bhc before the transfer becomes effective. This ensures that Bhc is fully aware of and approves the transfer, and that all parties are legally bound by the new arrangement. This provision is designed to ensure a clean transfer of responsibilities and prevent any ambiguity regarding who is responsible for the operation of the Bhc restaurants after the assignment.