What constitutes a material breach of the Bhc Franchise Agreement regarding payments?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
If an examination or audit discloses any underpayment of any fee, Franchisee must promptly pay the deficient amount plus interest calculated daily from the due date until paid at an APR of 18% (unless interest rates on delinquent payments in the state in which Franchisee's Franchised BHC Restaurant is located are limited by law to a lower APR, in which case that lower APR will apply).
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
Based on the 2025 FDD, a material breach of the Bhc Franchise Agreement regarding payments occurs if an examination or audit reveals any underpayment of fees. In such cases, the franchisee must promptly pay the deficient amount.
Bhc also charges interest on the underpaid amount, calculated daily from the due date until it is paid. The annual percentage rate (APR) for this interest is 18%, unless the law in the state where the Bhc restaurant is located limits interest rates on delinquent payments to a lower APR, in which case the lower rate will apply.
This means that if Bhc discovers a franchisee has underpaid any fees, the franchisee is not only responsible for the original amount owed but also for interest accruing daily until the balance is settled. Prospective franchisees should ensure they have robust accounting practices to avoid underpayments and the resulting interest charges, as these can accumulate quickly and lead to financial strain.