What is the consequence if a Bhc franchisee transfers a controlling interest in the franchise without offering the franchisor the right of first refusal?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) Any attempt by Franchisee to assign the Franchise, all (or substantially all) the assets of the Franchised BHC Restaurant, or a controlling interest in Franchisee (if an entity) in violation of this section 12.2 is void and will (i) constitute a material breach of this Agreement, (ii) cause this Agreement (and in Franchisor's sole discretion any or all other agreements between Franchisee and Franchisor, or between Franchisee and Franchisor's affiliates) to be subject to immediate termination without further notice, and (iii) confer no rights or interest whatsoever under this Agreement upon any other party.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if a franchisee attempts to assign the franchise, all or substantially all of the assets of the franchised Bhc Restaurant, or a controlling interest in the franchisee (if an entity) in violation of section 12.2, there are significant consequences.
The unauthorized transfer is considered void, meaning it has no legal effect. It also constitutes a material breach of the franchise agreement. This breach gives Bhc the right to immediately terminate the agreement without any further notice to the franchisee. Furthermore, Bhc has the discretion to terminate any or all other agreements between the franchisee and Bhc, or between the franchisee and Bhc's affiliates.
Finally, the attempted transfer confers no rights or interests whatsoever under the franchise agreement to any other party. This means the intended recipient of the transferred interest gains no legal standing or rights as a result of the unauthorized transfer. Therefore, franchisees must adhere to the outlined transfer protocols, including offering Bhc the right of first refusal, to avoid these serious repercussions.