Does the Bhc Franchise Agreement require a guarantee, and if so, where is the guarantee agreement found in the exhibits?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
o 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 l
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Franchise Agreement requires that each Principal Equity Operator (and their respective spouses, if applicable) must execute a Guarantee of Franchise Agreement. This guarantee is included as Exhibit 3 to the Franchise Agreement. Bhc executes the agreement with the understanding that the Principal Equity Operators and other individuals listed in Exhibit 2 are the sole holders of legal or beneficial interest in the Franchisee.
This requirement means that individuals with significant ownership or control over the franchisee entity, along with their spouses, must personally guarantee the franchisee's obligations under the Franchise Agreement. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract by the franchisee. By requiring a personal guarantee, Bhc ensures that these key individuals are personally liable for the franchisee's performance.
The guarantee ensures that Bhc can pursue the personal assets of the guarantors if the franchise fails to meet its financial or contractual obligations. The guarantor's obligations are absolute, unconditional, and irrevocable, meaning that any waiver or extension granted to the franchisee does not affect the guarantor's liability. This protects Bhc's interests and ensures the commitment of the franchisee's leadership to the success of the business.