What conditions must be met regarding the management of the Bhc franchised business after the death of an individual franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.4 Transfers upon the Death or Incapacity of an Individual Franchisee or Majority Equity Owner.
(a) Notwithstanding the foregoing, in the event of Franchisee's death or legal incapacity if Franchisee is an individual, or the death or legal incapacity of a Principal Equity Operator of Franchisee owning a majority equity interest ("Majority Equity Owner") in Franchisee (if an entity), the transfer of Franchisee's or the deceased Majority Equity Owner's interest in this Agreement to his or her spouse, parent or adult children, will not be deemed Assignment by Franchisee, provided a qualified and trained General Manager remains employed at the Franchised BHC Restaurant or another responsible management employee or agent of Franchisee satisfactorily trained by Franchisor will be responsible for the Franchised Business.
(b) In the event of an individual Franchisee's death or the death of a Majority Equity Owner, such person's interest in this Agreement or its equity interest in the franchise entity must Transfer as soon as practicable (but not more than 270 days) after the date of death in accordance with such person's will or, if such person dies without a will, in accordance with laws of intestacy governing the distribution of such person's estate, provided that adequate provision is made for the management of the Franchised Business.
If Franchisor determines (i) there is no imminent sale to a qualified successor or (ii) there is no heir or other Principal Equity Operator capable of operating the Franchise, Franchisor may (but is not obligated to) immediately commence operating the Franchised BHC Restaurant on Franchisee's behalf for a period of up to 90 days, renewable as Franchisor deems necessary for up to one year and Franchisor will periodically discuss the status with the heirs of the decedent.
Franchisor can place an interim manager Franchisee's Franchised BHC Restaurant, and Franchisee must pay Franchisor the manager's salary, transportation, lodging and related living expenses, and our management administration fee of 15%.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, in the event of the death or legal incapacity of an individual franchisee or a majority equity owner, the transfer of their interest in the Franchise Agreement to their spouse, parent, or adult children will not be considered an assignment, provided certain management conditions are met. Specifically, a qualified and trained General Manager must remain employed at the franchised Bhc restaurant. Alternatively, another responsible management employee or agent of the franchisee, who has been satisfactorily trained by Bhc, can be responsible for the franchised business.
Furthermore, the deceased's interest in the Franchise Agreement or their equity interest in the franchise entity must be transferred as soon as practicable, but no later than 270 days after the date of death. This transfer must occur in accordance with the person's will or, if there is no will, according to the laws of intestacy governing the distribution of the estate. It is essential that adequate provision is made for the management of the franchised business during this period.
If Bhc determines that there is no imminent sale to a qualified successor or that there is no heir or other principal equity operator capable of operating the franchise, Bhc has the option, but not the obligation, to immediately commence operating the franchised Bhc restaurant on the franchisee's behalf. This period of operation can last up to 90 days and may be renewed as Bhc deems necessary, up to one year. Bhc will periodically discuss the status with the heirs of the deceased. Bhc can place an interim manager at the franchised Bhc Restaurant, and the franchisee's estate is responsible for paying the manager's salary, transportation, lodging, related living expenses, and a management administration fee of 15%.
These stipulations ensure the continued operation and management of the Bhc franchise in the event of the franchisee's death, protecting the brand's integrity and providing a transition period for the franchisee's heirs. It is important for prospective franchisees to understand these conditions and plan accordingly, considering potential management succession and financial implications.