Does 'Control' for a Bhc franchise include indirect power to direct management and policies?

According to Bhc's 2025 Franchise Disclosure Document, 'Control' is defined as possessing the power to direct or influence the management and policies of an entity, whether directly or indirectly. This control can be exerted through various means, including ownership of voting securities or contractual agreements. This definition applies both to the franchisee's operation of their business and in the context of relationships with affiliates or subfranchisees.

For a prospective Bhc franchisee, this definition is important because it clarifies the scope of control that Bhc or its affiliates can exert over the franchise. It also highlights the franchisee's responsibility to ensure that any relationships they have with other entities do not create a situation where prohibited persons (those with prior affiliations to Bhc that could create conflicts of interest) have control over the franchise. This includes ensuring that these individuals do not hold management rights or other substantial control over the franchisee's operations.

This definition also extends to the Master Franchisee's relationship with subfranchisees. The Master Franchisee must approve potential subfranchisees and ensure they meet Bhc's requirements. Bhc also retains the right to approve these subfranchisees. An 'Affiliate Franchisee' is defined as any entity controlled by, controlling, or under common control with the Master Franchisee, either directly or indirectly. This ensures that Bhc maintains standards across all franchise locations, whether directly franchised or subfranchised.

In practical terms, this means a Bhc franchisee must operate the business according to the procedures and standards set forth in the Operations Manual and other written guidelines provided by Bhc. The franchisee must also ensure that their General Manager and other personnel are properly trained and adhere to these standards. Bhc retains the right to provide additional training and assistance to franchisees, and franchisees are expected to comply with these requirements to maintain the integrity of the Bhc system and brand.