What Bhc FDD item discusses Subfranchise Rights and Obligations?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
3.2 Subfranchise Rights and Obligation.
- (a) Prior to appointing any Subfranchisee, including an affiliate of Master Franchisee, Master Franchisee shall conduct an approval process to confirm that each potential Subfranchisee and each potential Subfranchised BHC Restaurants meets all of Franchisor's then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by Franchisor from time to time.
Franchisor also reserves the right to approve any or all potential Subfranchisees and potential BHC Restaurants.
Each potential Subfranchisee that Master Franchisee approves and Franchisor approves, to the extent Franchisor exercises its approval right, shall be referred to herein as a "Subfranchisee." For purposes of clarification, Master Franchisee may not directly operate BHC Restaurants under this Agreement, but may only do so through an Affiliate Franchisee that enters into a then-current Subfranchise Agreement with Master Franchisee.
An "Affiliate Franchisee" means in relation to a Master Franchisee, any person controlling, controlled by or under common control with Master Franchisee, either directly or indirectly through one or more intermediaries.
In addition, Master Franchisee must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before Master Franchisee may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Item 23 discusses Subfranchise Rights and Obligations. Specifically, section 3.2 outlines the obligations a Master Franchisee has when appointing subfranchisees.
Before appointing any subfranchisee, the Master Franchisee must conduct an approval process to ensure that the potential subfranchisee and the location for the Subfranchised Bhc Restaurant meet Bhc's current minimum requirements. Bhc also retains the right to approve potential subfranchisees and restaurant locations. A Master Franchisee may only operate Bhc Restaurants through an Affiliate Franchisee that has a Subfranchise Agreement with the Master Franchisee. An Affiliate Franchisee is defined as a person controlled by or under common control with the Master Franchisee.
Furthermore, the Master Franchisee must establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area through a separate Subfranchise Agreement before granting subfranchises to third parties. This ensures the Master Franchisee has direct experience with the Bhc system before licensing it to others. These stipulations are designed to protect Bhc's brand standards and ensure that all subfranchisees are adequately vetted and supported.