What constitutes a 'material breach' of the agreement by the Bhc Master Franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
sub franchise or otherwise transfer, or attempt to sub franchise or otherwise transfer the Franchised Business, or to transfer or sub franchise a portion but not all of Master Franchisee's rights hereunder without Franchisor's express prior written consent, which may be withheld for any reason in Franchisor's sole discretion.
- (e) Any attempt by Master Franchisee to assign the Franchise, all (or substantially all) the assets of the BHC Restaurant, or a controlling interest in Master 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 Master Franchisee and Franchisor, or between Master 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.
- (f) Upon Franchisor's consent to any Assignment by Master Franchisee, Master Franchisee must bring all accounts with Franchisor current and transfer to Master Franchisee's assignee all service agreements or contracts signed by customers of the Franchised Business conducted at Master Franchised BHC Restaurant.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, several actions can constitute a material breach of the Master Franchise Agreement. These include attempting to assign the franchise or its assets in violation of the agreement. Additionally, if the Master Franchisee fails to promptly commence and diligently complete the design, leasehold improvements, inventorying, equipping, and opening of the franchised Bhc Restaurant, it will be considered a material breach.
Furthermore, if deficiencies noted during inspections by Bhc are not corrected within 30 days, the agreement may be terminated without liability to Bhc. The Master Franchisee is also responsible for ensuring Subfranchisees comply with their agreements, and any act or omission by a Subfranchisee that violates the Master Franchise Agreement is deemed a breach by the Master Franchisee.
In practical terms, these stipulations mean a Bhc Master Franchisee must adhere strictly to the outlined procedures for transfers, maintain diligent progress in setting up the restaurant, promptly address any issues identified during inspections, and ensure their Subfranchisees also comply with all agreements. Failure to do so could lead to termination of the agreement and potential financial repercussions.