What constitutes an 'Assignment by Franchisee' according to the Bhc franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2 Assignment by Franchisee.
- (a) This Agreement is being executed by Franchisor in reliance upon and in consideration of the unique skills and qualifications of Franchisee and the Principal Equity Operators and the trust and confidence reposed in them by Franchisor.
Therefore, neither Franchisee's interest in this Agreement and the Franchise granted hereunder, nor all or substantially all of the assets of the Franchised BHC Restaurant, nor a controlling or non-controlling interest in Franchisee (if an entity), may be assigned, transferred, shared or divided, voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, in any manner (collectively, "Assignment by Franchisee"), without Franchisor's prior written consent and, except for any transfer of a non-controlling interest, subject to Franchisor's right of first refusal provided for in section 12.3 hereof, and transfer to an Affiliated Entity provided for in section 12.6 hereof.
Franchisor's consent to a specific Assignment by Franchisee is not cumulative and will not apply to any subsequent assignments, in respect of each of which Franchisee must comply with this section 12.2.
- (b) Prior to any Assignment by Franchisee, Franchisee must notify Franchisor of Franchisee's intent to sell, transfer or assign the Franchise, all (or substantially all) the assets of the Franchised BHC Restaurant, or a controlling or non- controlling interest in Franchisee (if an entity).
The notice must be in writing, delivered to Franchisor in accordance with section 16.1 hereof and include the following:
(i) the proposed transferee's name and address;
(ii) a copy of all agreements related to the sale, assignment, or transfer of the Franchise, the assets of the Franchised BHC Restaurant, or the controlling interest in Franchisee (if an entity); and
(iii) the proposed transferee's application for approval to become the successor franchisee (this application must include all forms, financial disclosures and related information generally used by Franchisor when interviewing prospective new franchisees, if Franchisor makes those forms available to Franchisee.
If the forms are not readily available, Franchisee must request that Franchisor deliver the forms to Franchisee by business courier in accordance with section 16.1 hereof within 15 calendar days).
As soon as practicable after the receipt of the proposed transferee's application, Franchisor will notify, in writing, Franchisee and the proposed transferee of any additional information or documentation necessary to complete the transfer application.
If Franchisor's then-existing standards for the approval of new or renewing franchisees are not readily available to Franchisee when Franchisee notifies Franchisor of Franchisee's intent to sell, transfer, or assign the Franchise, all or substantially all of the assets of the Franchised BHC Restaurant, or a controlling or non-controlling interest in Franchisee (if an entity), Franchisor will communicate the standards to Franchisee within 15 calendar days.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, an 'Assignment by Franchisee' encompasses various scenarios where the franchisee's rights or assets are transferred to another party. Specifically, it includes any assignment, transfer, sharing, or division, whether voluntary or involuntary, of the franchisee's interest in the Franchise Agreement, the franchise itself, all or substantially all of the assets of the franchised Bhc Restaurant, or a controlling or non-controlling interest in the franchisee (if the franchisee is an entity). This broad definition covers actions taken 'in whole or in part, by operation of law or otherwise, in any manner.'
This means that a Bhc franchisee cannot sell the restaurant, transfer their franchise rights, or alter ownership significantly without the franchisor's prior written consent. Even a partial transfer of ownership or assets falls under this restriction. Bhc retains significant control over who operates its franchises and ensures that any new operator meets its standards. The FDD also states that Bhc's consent to one assignment does not mean consent is given for future assignments, and the franchisee must comply with the assignment terms for each subsequent assignment.
Before any such assignment, the franchisee must provide written notice to Bhc, including the proposed transferee's name and address, copies of all agreements related to the transfer, and the proposed transferee's application for approval as a successor franchisee. Bhc can request additional information or documentation to complete the transfer application. This process allows Bhc to thoroughly vet potential new franchisees and maintain brand consistency.
Any attempt to assign the franchise in violation of these terms is considered a material breach of the Franchise Agreement, potentially leading to immediate termination of the agreement and forfeiture of any rights or interests under it. This underscores the importance of obtaining Bhc's consent before undertaking any action that could be construed as an assignment. Franchisees should be aware of these restrictions and follow the prescribed procedures to avoid jeopardizing their franchise.