What are the Development Rights granted to a Master Franchisee of Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
are defined below).
Under the MFA, you will be granted the right and license: (i) to grant subfranchises for the establishment and operation of BHC Restaurants, as defined below, within the Development Area ("Development Rights") to third party subfranchisees that meet our requirements ("Subfranchisees") by entering into Subfranchise Agreements (as defined below) ("Subfranchised BHC Restaurants"); and (ii) to directly own and operate through an affiliate of the Master Franchisee ("Affiliate Franchisee") ("Affiliate Franchised BHC Restaurants") within the Development Area once opened, and to support, and receive fees from, as applicable, all Master Franchised BHC Restaurants within the Development Area once opened ("Operating Rights").
"BHC Restaurant(s)" means a single retail dine-in, carry-out, drive-thru, and delivery restaurant, serving classic Korean flavor fried chicken (e.g., Korean cheese seasoning, Korean soy sauce, sweet & spicy sauce), sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories, using designated concepts, designs, recipes, authorized equipment, and techniques.
"BHC Products" mean any product or service we authorize to be provided at BHC Restaurants under the System, as we may amend from time to time, with the understanding that any such products and services, including pre-packaged or ready-to-drink products and/or related merchandise or services, may only be offered to Affiliate Franchisees and Subfranchisees located within the Development Area, and not through any other distribution channels.
"Master Franchised BHC Restaurants" means Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants opened and operated by Affiliate Franchisee or Subfranchisee respectively pursuant the Master Franchisee's Development Rights and Operating Rights.
You will be granted the right to use the "BHC CHICKEN" mark and "BHC" name, as well as such other trademarks, service marks, tradenames logos, designs and identifying slogans, whether registered or not registered, that we specifically designate, in the MFA or otherwise in writing, for use by Master Franchisee from time to time (collectively, the "Trademarks"). In addition, under the MFA, you will be granted the right to use the System and our "IP Rights" in accordance with our manuals and other requirements for the operation of Master Franchise Businesses.
The "System" is characterized by a distinctive layout, service style, design, signs, décor, furnishings, recipes, procedures, and techniques that is an unique system for the sourcing, distribution, offer and sale of Korea style fried chicken and sandwich, beverage products, other foods, certain complementary products, accessories, and services under the Trademarks, which includes operating and service procedures, management practices, techniques, methods, knowledge, expertise, skill and proprietary information relating to the operation of a food and beverage business, layout and other systems and procedures in relation to the Master Franchise Business and the operation of BHC Restaurants, as well as any amendments, and improvements we or our affiliates make to such System or any of the foregoing from time to time.
You will be required to conduct an approval process, including a background check, to confirm that each potential subfranchisee and each potential BHC Restaurant meet all of our then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by us from time to time. We also have the right, upon written notice to you, at our sole discretion, to approve or disapprove any or all potential subfranchisees and potential BHC Restaurants.
Source: Item 1 — The Franchisor, And Any Parents, Predecessors, And Affiliates (FDD pages 7–10)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is granted specific Development Rights within a designated Development Area. These rights allow the Master Franchisee to grant subfranchises to third parties, known as Subfranchisees, for the establishment and operation of Bhc restaurants. These restaurants are referred to as Subfranchised Bhc Restaurants. Additionally, the Master Franchisee has the right to directly own and operate Bhc restaurants through an affiliate, termed Affiliate Franchisee, which are known as Affiliate Franchised Bhc Restaurants. The Master Franchisee also has Operating Rights to support and receive fees from all Master Franchised Bhc Restaurants within their Development Area. These restaurants serve classic Korean flavor fried chicken, sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories.
Bhc defines "Master Franchised Bhc Restaurants" as both Affiliate Franchised Bhc Restaurants and Subfranchised Bhc Restaurants that are opened and operated by either the Affiliate Franchisee or Subfranchisee, respectively. These operations must align with the Master Franchisee's Development Rights and Operating Rights. The Master Franchisee is also granted the right to use the "BHC CHICKEN" mark and "BHC" name, along with other designated trademarks, service marks, tradenames logos, designs and identifying slogans. They can also use Bhc's System and IP Rights, following the guidelines in the manuals for operating Master Franchise Businesses.
To maintain these Development Rights, the Master Franchisee must adhere to a development schedule, establishing and operating a cumulative number of Master Franchised Bhc Restaurants within the Development Area by specific dates. Before granting subfranchises to third parties, the Master Franchisee must first establish and operate at least one Affiliate Franchised Bhc Restaurant under a separate Franchise Agreement. The Master Franchisee is responsible for creating a subfranchise agreement, which requires Bhc's prior written approval, and cannot modify the terms of the approved agreement without further written approval from Bhc. The subfranchise agreement must align with the Master Franchise Agreement and Bhc's prescribed terms, including the maximum territory size granted under any Subfranchise Agreement.