In the event of the death or incapacity of a Bhc franchisee, who can the franchisee's interest be transferred to without being considered an assignment?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.4 Transfers upon the Death or Incapacity of an Individual Franchisee or Majority Equity Owner.
(a) Notwithstanding the foregoing, in the event of Franchisee's death or legal incapacity if Franchisee is an individual, or the death or legal incapacity of a Principal Equity Operator of Franchisee owning a majority equity interest ("Majority Equity Owner") in Franchisee (if an entity), the transfer of Franchisee's or the deceased Majority Equity Owner's interest in this Agreement to his or her spouse, parent or adult children, will not be deemed Assignment by Franchisee, provided a qualified and trained General Manager remains employed at the Franchised BHC Restaurant or another responsible management employee or agent of Franchisee satisfactorily trained by Franchisor will be responsible for the Franchised Business.
(b) In the event of an individual Franchisee's death or the death of a Majority Equity Owner, such person's interest in this Agreement or its equity interest in the franchise entity must Transfer as soon as practicable (but not more than 270 days) after the date of death in accordance with such person's will or, if such person dies without a will, in accordance with laws of intestacy governing the distribution of such person's estate, provided that adequate provision is made for the management of the Franchised Business.
If Franchisor determines (i) there is no imminent sale to a qualified successor or (ii) there is no heir or other Principal Equity Operator capable of operating the Franchise, Franchisor may (but is not obligated to) immediately commence operating the Franchised BHC Restaurant on Franchisee's behalf for a period of up to 90 days, renewable as Franchisor deems necessary for up to one year and Franchisor will periodically discuss the status with the heirs of the decedent.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, in the event of the death or legal incapacity of an individual franchisee, or the death or legal incapacity of a Principal Equity Operator owning a majority equity interest in the franchisee, the transfer of the interest in the Franchise Agreement to the spouse, parent, or adult children of the franchisee or Majority Equity Owner will not be considered an assignment. This is provided that a qualified and trained General Manager remains employed at the franchised Bhc restaurant, or another responsible management employee or agent of the franchisee satisfactorily trained by Bhc will be responsible for the franchised business.
This clause provides some flexibility for the franchisee's family in the event of death or incapacity, allowing them to maintain ownership without needing to go through the standard assignment process, which usually requires Bhc's approval. However, it is conditional on having a qualified manager in place to oversee the business operations. This ensures that the restaurant continues to be managed competently, maintaining Bhc's standards.
Furthermore, the FDD states that the transfer of interest or equity must occur as soon as practicable, but no more than 270 days after the date of death, in accordance with the person's will or the laws governing the distribution of the estate if there is no will. Adequate provision must also be made for the management of the franchised business during this period. If Bhc determines that there is no imminent sale to a qualified successor or no heir capable of operating the franchise, Bhc has the option to operate the restaurant on the franchisee's behalf for up to 90 days, with possible renewals for up to one year, while discussing the status with the heirs.