Which Bhc FDD item covers Franchise Agreements?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchised BHC Restaurants; marketing and advertising, specialty retail items and promotional activities) are undertaken to develop, maintain and enhance the Marks and Franchisor's business reputation.
2.2 The Franchise System.
Franchisor has developed and supervises the System and all BHC retail locations to be operated under the Marks operated in accordance with the provisions of BHC franchise agreements and Franchisor's Operations Manual, as periodically amended.
3. GRANT OF FRANCHISE
3.1 Grant of Franchise.
- (a) By their respective signatures below, Franchisor hereby grants to Franchisee, and Franchisee hereby accepts, a non-exclusive license ("Franchise") to participate in and use the System to conduct the Franchised Business at the Franchised BHC Restaurant and within Franchisee's Territory as described in Exhibit 1 attached hereto, in strict accordance with this Agreement and the Operations Manual, from the Effective Date until the end of the term hereof, and any additional term unless sooner terminated. So long as Franchisee complies with this Agreement, Franchisor will not authorize another BHC franchisee to operate, or itself operate, a BHC retail Franchised BHC Restaurant in Franchisee's Territory, subject to exceptions and reservations provided herein.
- (b) Franchisor is executing this Agreement in reliance that the Principal Equity Operators and other individuals identified in Exhibit 2 of this Agreement are the sole holders of a legal or beneficial interest in Franchisee.
- (c) Each Principal Equity Operator (and their respective spouses, if applicable), must execute the Guarantee of Franchise Agreement attached as Exhibit 3 of this Agreement.
- (d) Franchisee acknowledges that Franchisor may have granted and may in the future operate or grant other licenses and franchises for other retail and wholesale food service businesses outside the Territory. FRANCHISEE MAY NOT USE FRANCHISOR'S MARKS, OPERATIONAL TECHNIQUES, SERVICE CONCEPTS OR PROPRIETARY INFORMATION IN CONNECTION WITH ANY BUSINESSES OR SERVICES OTHER THAN THE FRANCHISED BUSINESS CONDUCTED BY FRANCHISEE AT THE FRANCHISED BHC RESTAURANT WITHOUT FRANCHISOR'S EXPRESS PRIOR WRITTEN PERMISSION, WHICH PERMISSION, IF GRANTED, WILL BRING SUCH BUSINESSES OR SERVICES WITHIN THE SCOPE OF THE FRANCHISED BUSINESS AND SUBJECT REVENUES THEREFROM TO PAYMENT OF ROYALTY AND MARKETING AND PROMOTION FEES.
- (e) Upon expiration or termination of this Agreement for any reason whatsoever, Franchisee shall have no claim whatsoever against Franchisor for compensation for any goodwill associated with the Marks.
3.2 Reserved Rights.
(a) Nothing contained herein accords Franchisee any right, title, or interest in or to the Marks, System, marketing and operational techniques, service concepts, proprietary information or goodwill of Franchisor or associated with the System, except such rights as may be granted hereunder. THIS AGREEMENT GRANTS FRANCHISEE ONLY THE RIGHT TO OPERATE THE FRANCHISED BUSINESS AT FRANCHISEE'S FRANCHISED BHC RESTAURANT AND NOWHERE ELSE UNLESS FRANCHISOR SPECIFICALLY ALLOWS FRANCHISEE TO OFFER BHC PRODUCTS ELSEWHERE. ALL OTHER RIGHTS ARE RETAINED BY AND RESERVED TO FRANCHISOR.
(b) Franchisor reserves the right to develop other systems involving similar or dissimilar services or goods, under dissimilar service marks, trademarks and trade names belonging to Franchisor, without necessarily granting Franchisee any rights in those systems. Franchisor reserves all rights to market and sell BHC Products at venues other than Franchised BHC Restaurants and through other channels of distribution anywhere, including within Franchisee's Territory.
3.3 Promotion and Development of Franchisee's Franchised BHC Restaurant.
Franchisee must (i) diligently and effectively promote, market, and engage in the Franchised Business at its Franchised BHC Restaurant; (ii) develop, to the best of its ability, the potential for future Franchised Business as approved by the Franchisor; and (iii) devote and focus a substantial portion of Franchisee's attentions and efforts to such promotion and development.
3.4 Extent of Grant.
- (a) Franchisee understands and agrees that Franchisee is licensed hereby only for the operation of the Franchised Business at and from Franchisee's Franchised BHC Restaurant and only at Franchisee's Location (unless Franchisor specifically agrees otherwise on a case-by-case basis). Franchisee must offer and sell at Franchisee's Franchised BHC Restaurant and at Franchisee's Location only BHC Products and other goods and services that Franchisor designates as required or approved for all franchisees. Franchisor has the right to change and add other authorized goods and services, which Franchisee will then be required to offer.
- (b) Franchisee may not sublicense, sublease, subcontract or enter any management agreement, concession agreement, partnership agreement or joint venture agreement providing for, the right to operate the Franchised Business or to use the System granted pursuant to this Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, multiple sections of Item 23 discuss aspects of the Franchise Agreement. Specifically, section 3.1 outlines the grant of the franchise, detailing that Bhc grants the franchisee a non-exclusive license to operate under the Bhc system at a specified location. This license is valid from the effective date of the agreement until the end of its term, with provisions for renewal unless terminated earlier. Bhc assures that, provided the franchisee adheres to the agreement, it will not authorize another Bhc franchisee or operate a retail Bhc restaurant within the franchisee's designated territory, subject to certain exceptions. The agreement is executed with the understanding that the individuals listed in Exhibit 2 are the sole holders of interest in the franchisee. Furthermore, Principal Equity Operators are required to execute a Guarantee of Franchise Agreement, as detailed in Exhibit 3.
Section 3.4(a) states that the franchisee is licensed to operate the franchised business only at the specified location and must offer and sell only Bhc products and other goods and services designated as required or approved by Bhc. Section 3.4(d) states that Master Franchisee must comply with all of the terms and conditions of each Franchise Agreement, including the operating requirements specified in each Franchise Agreement.
Section 12.2 addresses the transfer of the franchise, outlining that any transfer of rights, duties, and obligations under the agreement must comply fully with the conditions specified in that section. A key condition is that the transferee's personnel must be trained by Bhc as a prerequisite for Bhc's consent to the transfer. The transferred Bhc restaurant cannot be operated by the transferee until Bhc accepts the transferee in writing as qualified and consents to the transfer. Additionally, section 12.2(d) specifies that the franchisee cannot pledge, encumber, or grant any third party a security interest in the agreement without Bhc's consent, except for pledges related to Small Business Administration loans. The franchisee also cannot sub-franchise or transfer the franchised business without Bhc's express prior written consent, which may be withheld at Bhc's discretion. Section 12.2(e) clarifies that any attempt to assign the franchise in violation of these terms is void and constitutes a material breach of the agreement, potentially leading to immediate termination and nullifying any rights under the agreement for other parties.