What constitutes a 'material breach' of the Bhc franchise agreement by the franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ny third party a security interest in this Agreement in any manner whatsoever (except that with Franchisor's consent, which will not be unreasonably withheld, Franchisee may pledge a security interest in this Agreement in connection with a Small Business Administration loan), nor 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 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 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 with
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 franchise agreement by the franchisee. These include attempting to assign the franchise or its assets without proper consent, failing to maintain required insurance coverage, and failing to promptly commence and diligently complete the design, leasehold improvements, inventorying, equipping, and opening of the franchised Bhc restaurant.
Specifically, any attempt by the franchisee 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) without the franchisor's consent is considered a material breach. This can lead to immediate termination of the agreement without further notice.
Additionally, franchisees must procure and maintain the insurance coverage required under the agreement. Failure to do so, for any reason, will be deemed a material breach. Furthermore, franchisees are expected to promptly begin and diligently finish the design, leasehold improvement, inventorying, equipping, and opening of the franchised Bhc Restaurant. Failure to meet these obligations also constitutes a material breach of the agreement.
These stipulations are important for prospective Bhc franchisees to understand, as a material breach can have significant consequences, including termination of the franchise agreement and potential financial penalties. Franchisees should ensure they fully understand and comply with all requirements outlined in the franchise agreement to avoid such breaches.