What constitutes a material breach of the Bhc Master Franchise Agreement regarding the design, leasehold improvement, and opening of the restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
t while work is in progress. Franchisor may make video records of leasehold improvement in process and may require such reasonable alterations to or modifications in the leasehold improvement of the Franchised BHC Restaurant that Franchisor deems necessary. Master Franchisee's failure to promptly commence and diligently complete the design, leasehold improvement, inventorying, equipping, and opening of the Franchised BHC Restaurant will be a material breach of this Agreement. Before the Franchised BHC Restaurant opens to retail customers and before final inspections by any governmental agency, Franchisor will visit the site of Franchised BHC Restaurant for three (3) on-site visits and complete a final "walk through" inspection of the BHC Restaurant and issue a written consent to open. Any deficiencies noted by Franchisor as a result of this inspection must be corrected by Master Franchisee within 30 days or this Agreement may be terminated without any liability to Franchisor. Master Franchisee shall be responsible for such inspection fee of USD$600, all accommodation, transportation, meals, daily allowances, and other costs and expenses for the Franchisor's personnel in connection with such visits on site but up to three times per Franchised BHC Restaurant only.
- (g) Unless otherwise agreed to in writing by Master Franchisee and Franchisor, Master Franchisee has the sole responsibility for locating, securing, and obtaining suitable premises for the Franchised BHC Restaurant.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a material breach of the Master Franchise Agreement occurs if the franchisee fails to promptly commence and diligently complete the design, leasehold improvement, inventorying, equipping, and opening of the franchised Bhc restaurant. This means the franchisee must act quickly and consistently to move the project forward.
Bhc requires the franchisee to use licensed general contractors, designers, vendors, and architects accepted by Bhc before starting any leasehold improvements. The franchisee must also submit a complete set of final plans and specifications to Bhc's for review and written consent before commencing any leasehold improvements. Bhc has complete control over the design of the restaurant, and the franchisee cannot modify the design or choose third-party designers without written consent.
Before opening to the public, Bhc will conduct up to three on-site visits, including a final "walk-through" inspection. The franchisee is responsible for a $600 inspection fee, plus all accommodation, transportation, meals, and daily allowances for Bhc's personnel for these visits. Any deficiencies noted during the inspection must be corrected within 30 days, or the agreement may be terminated without liability to Bhc. Failing to meet these obligations constitutes a material breach of the agreement.