After assigning the franchise agreement to an Affiliated Entity, is a Bhc franchisee allowed to maintain direct ownership and operation of Franchised Bhc Restaurants that they (or their Affiliated Entities) have 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 Franchised Bhc Restaurants after assigning the franchise agreement to an Affiliated Entity. This applies to restaurants that the franchisee or their Affiliated Entities have developed.
This means that if a Bhc franchisee transfers their franchise agreement to an Affiliated Entity (an entity organized to operate as a developer of Bhc Restaurants and entirely owned by the franchisee), they will no longer be able to directly own or operate the Bhc restaurants they previously developed. This condition is in place even if the Affiliated Entity was involved in the development of those restaurants.
This policy ensures that once the franchise agreement is transferred, the control and operation of the restaurants are fully managed by the Affiliated Entity. It is important for prospective franchisees to understand this restriction, especially if they plan to expand and then transfer their interests to a separate entity while still desiring to maintain some level of direct operational control.