What constitutes a 'Competitive Business' in relation to a Bhc franchise?

According to Bhc's 2025 Franchise Disclosure Document, a 'Competitive Business' is defined as any business that derives more than 10% of its gross sales from the sale, processing, or manufacturing of fried chicken, sandwiches, and other products offered in Franchised Bhc Restaurants. Additionally, these products must constitute 10% or more of the gross retail sales of any Franchised Bhc Restaurant to be considered a competitive business.

This definition is important for prospective franchisees because it outlines the scope of activities that could be considered a conflict of interest during the term of the franchise agreement. Bhc aims to protect its market share and the integrity of its brand by preventing franchisees from engaging in businesses that directly compete with the products and services offered by Bhc restaurants. This restriction is in place to ensure that franchisees focus their efforts on maximizing the success of their Bhc franchise and do not divert resources or attention to competing ventures.

Understanding this definition is crucial for franchisees to avoid any actions that could be construed as a breach of the franchise agreement. Franchisees and their Principal Equity Operators must not operate, manage, own, assist, or hold an interest in any business that falls under this definition without the express prior written consent of Bhc. Obtaining consent from Bhc is at their sole discretion, meaning approval is not guaranteed. This non-compete clause is designed to protect Bhc's market position and the investment made by both the franchisor and other franchisees in the Bhc system.