What conditions must an entity meet to be considered an 'Affiliated Entity' eligible to receive a franchise transfer from a Bhc franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.6 Transfers from Franchisee to an Affiliated Entity.
- (a) Upon not less than 30 days' prior written notice to Franchisor, Franchisee may, upon Franchisor's written consent, assign and transfer this Agreement at its entirety to an entity that is (i) organized to operate as a developer of Franchised BHC Restaurants and (ii) entirely owned by Franchisee ("Affiliated Entity").
- (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 can transfer their agreement to an 'Affiliated Entity' under specific conditions. To qualify as an Affiliated Entity, the entity must be organized to operate as a developer of Franchised Bhc Restaurants and be entirely owned by the franchisee. This means the franchisee must have full ownership of the entity seeking the transfer.
To complete the transfer, the franchisee must provide Bhc with at least 30 days' prior written notice and obtain Bhc's written consent. The transfer must be documented in a written instrument, satisfactory to Bhc, where the Affiliated Entity expressly assumes all of the franchisee's rights, duties, and obligations under the franchise agreement. This includes all responsibilities, whether they existed at the time of the transfer or arise afterward. The Affiliated Entity must agree to be bound by all terms and provisions of the agreement to the same extent as the original franchisee.
A copy of the executed transfer instrument, signed by both the franchisee and the Affiliated Entity, must be delivered to Bhc before the transfer's effective date. After the transfer, the original franchisee cannot maintain direct ownership and operation of the Bhc Restaurants that the franchisee (or its Affiliated Entities) has developed. This ensures that the Affiliated Entity takes full responsibility for the franchise operations.
This process ensures that Bhc maintains control over who operates its franchises and that any entity taking over a franchise meets specific criteria and agrees to uphold all obligations. For a prospective franchisee, this means that if they plan to transfer their franchise to a separate entity they own, they must ensure that the entity meets these requirements and that all necessary documentation and approvals are in place.