Must the form of the Bhc Subfranchise Agreement be approved by the Franchisor?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Once a Subfranchisee and a potential BHC Restaurant have been approved pursuant to the approval process described in paragraph 2(b), Master Franchisee shall enter into a Subfranchise Agreement in relation to the relevant approved BHC Restaurant with the relevant Subfranchisee in the form approved by Franchisor, including only such amendments to such form as approved by Franchisor in writing (such executed agreement, "Subfranchise Agreement").
Prior to entering into any form Subfranchise Agreement or any other form agreements, including an area development agreement or lease addendum (collectively, "Other Agreements"), for the first time with a prospective subfranchisee or Subfranchisee, Master Franchisee shall submit to and receive Franchisor's approval of such proposed form Subfranchise Agreement or Other Agreement.
In addition, once a form Subfranchise Agreement or Other Agreement has been approved, Master Franchisee shall not modify the terms of such form documents without submitting to and receiving Franchisor's prior written approval of such modified form documents.
Master Franchisee's form Subfranchise Agreement and Other Agreements shall include terms and conditions consistent with this Agreement and as prescribed by Franchisor from time to time, including the maximum size of the territory granted under any Subfranchise Agreement or Other Agreement.
Executed copies of each Subfranchise Agreement and any related Other Agreements shall be sent to Franchisor before the opening of the relevant approved BHC Restaurant for Franchisor's records.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the form of the Subfranchise Agreement must be approved by Bhc. Specifically, the master franchisee must use a Subfranchise Agreement form that Bhc has approved. Any changes to the approved form must also receive prior written approval from Bhc.
This requirement ensures that all Subfranchise Agreements align with Bhc's standards and the terms of the master franchise agreement. It also allows Bhc to maintain consistency and control over its brand and operations within the subfranchised locations. The master franchisee must also send executed copies of each Subfranchise Agreement and any related agreements to Bhc before the subfranchised BHC Restaurant opens for Bhc's records.
Furthermore, the master franchisee is obligated to ensure that the terms and conditions within the Subfranchise Agreements and any other related agreements are consistent with, and no less onerous than, the terms outlined in the master franchise agreement, unless Bhc provides written approval otherwise. This protects Bhc's interests and ensures that subfranchisees operate under similar standards and obligations as the master franchisee.
Bhc also has the right to approve any or all amendments, renewals, terminations, transfers, assignments, or novations of any Subfranchise Agreements or other agreements, or any rights under those agreements, with written notice to the master franchisee. This provision gives Bhc significant oversight and control over changes to subfranchise arrangements, allowing it to intervene if necessary to protect its brand and system standards.