What exclusive rights does the Master Franchisee receive from Bhc to establish and operate Franchised Bhc Restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
erated in accordance with the provisions of BHC franchise agreements and Franchisor's Operations Manual, as periodically amended.
3. GRANT OF MASTER FRANCHISE
3.1 Grant of Master Franchise.
Subject to the terms and conditions of this Agreement, Franchisor hereby grants to Master Franchisee:
- (a) the exclusive, non-transferable right and license to, (a) establish and operate at least one (1) Franchised BHC Restaurant through Master Franchisee's Affiliate, and (b) after opening at least one (1) Affiliate Franchised BHC Restaurant, to grant subfranchises to Subfranchisees to establish and operate Subfranchised BHC Restaurants in accordance by entering Subfranchise Agreements to establish and operate BHC Restaurants using the BHC System and IP Rights, and in accordance with the Operating Manuals ("Development Rights") with the schedule of openings attached hereto as Exhibit 1 (the "Development Schedule") and within the geographical area (the "Development Area") indicated in the Development Schedule.
- (b) So long as Master Franchisee's obligations under the Development Schedule are being met on a timely basis and until this Agreement terminates, Franchisor will not itself operate a BHC Restaurant within the Development Area, nor allow any of its affiliates or other BHC franchisees to do so. Captive locations will be excluded from Master Franchisee's Development Area and Franchisor has the right to develop or franchise the following Captive location locations: (1) military bases; (2) public transportation facilities; (3) sports facilities, including race tracks; (4) student unions or other similar buildings on college or university campuses; (5) amusement and theme parks; (6) malls; (7) special events; (8) hospitals; (9) hotel, resort, or other lodging facility; (10) state or national parks; (11) exhibition hall; conference facility or convention center; (12) casino or gambling establishment; (13) esports events and venues; (14) street fairs; (15) delivery facilities (e.g.,, ghost kitchens) or (16) any similar area to the sites referenced herein n (collectively, "Captive locations"). Franchisor may not alter the Development
Area without Franchisee's written agreement. However, Franchisor may terminate the MFA if Master Franchisee (i) fails to meet the Development Schedule; (ii) fail to comply with any other terms and conditions of this Agreement; (iii) make or attempt to make a transfer or assignment in violation of this Agreement; or (iv) fail to comply with the terms and conditions of any individual Franchise Agreement or of any other agreement to which Master Franchisee and Franchisor or its affiliates are parties.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Master Franchisee receives the exclusive, non-transferable right and license to establish and operate at least one Franchised Bhc Restaurant through their Affiliate. After opening at least one Affiliate Franchised Bhc Restaurant, the Master Franchisee can grant subfranchises to Subfranchisees to establish and operate Subfranchised Bhc Restaurants. These rights are granted within a specific geographical area known as the "Development Area," as outlined in the Development Schedule.
Bhc also commits not to operate or allow its affiliates or other franchisees to operate a Bhc Restaurant within the Development Area, as long as the Master Franchisee meets their obligations under the Development Schedule. However, this exclusivity does not extend to certain "Captive locations," which Bhc reserves the right to develop or franchise. These Captive Locations include military bases, public transportation facilities, sports facilities, student unions, amusement and theme parks, malls, special events, hospitals, hotels/resorts, state/national parks, exhibition halls/conference facilities/convention centers, casinos/gambling establishments, esports events and venues, street fairs, and delivery facilities (e.g., ghost kitchens).
This agreement grants the Master Franchisee the right to operate the Franchised Business at the Master Franchised Bhc Restaurant, and nowhere else unless Bhc specifically allows the Master Franchisee to offer Bhc products elsewhere. All other rights are retained by and reserved to Bhc. The Master Franchisee may not use Bhc's marks, operational techniques, service concepts, or proprietary information in connection with any businesses or services other than the Franchised Business conducted at the Bhc Restaurant without Bhc's express prior written permission.
Prospective Master Franchisees should carefully review the Development Schedule and the definition of the Development Area to understand their exclusive rights and development obligations. They should also be aware of the Captive Locations that are excluded from their exclusive territory, as these represent potential areas where Bhc may operate or franchise other outlets. Understanding these conditions is crucial for assessing the potential market and competition within the Master Franchisee's designated area.