After the Bhc franchise terminates, can the franchisee contest the validity of Bhc's Marks or Intellectual Property?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
System are Franchisor's exclusive property. Franchisee now asserts no claim and will hereafter assert no claim to any goodwill, reputation, or ownership thereof because of Franchisee's use thereof or otherwise. It is expressly understood and agreed that ownership and title of the Trade Dress, Operations Manual and Franchisor's other manuals, bulletins,
instruction sheets, forms, methods of operation and goodwill are and, as between Franchisee and Franchisor, remain vested solely in Franchisor, and the use thereof is only co-extensive with the term of this Agreement.
- (c) Franchisee agrees that during the term of the Franchise, and after any assignment, expiration or termination of the Franchise, Franchisee will not, directly or indirectly, commit an act of infringement or contest or aid others in contesting the validity, distinctiveness, secondary meaning, ownership or enforceability of the Marks or Intellectual Property, or take any other action in derogation of the Marks or Intellectual Property, and that no monetary amount will be assigned as attributable to any goodwill associated with Franchisee's use of the System, the Marks or Intellectual Property.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are prohibited from contesting the validity of Bhc's trademarks or intellectual property, even after the franchise agreement has been terminated. This restriction extends not only to direct challenges but also to assisting others in contesting Bhc's rights. This obligation remains in effect regardless of whether the termination is due to assignment, expiration, or any other reason.
This provision is designed to protect Bhc's brand and intellectual property rights. By agreeing to this clause, a franchisee acknowledges the value and exclusivity of Bhc's trademarks and intellectual property. This prevents franchisees from undermining the brand's reputation or creating confusion in the marketplace, which could harm the entire franchise system. The franchisee also agrees that no monetary amount will be assigned as attributable to any goodwill associated with the franchisee's use of the System, the Marks, or Intellectual Property.
For a prospective Bhc franchisee, this means understanding that their rights to use Bhc's trademarks and intellectual property are limited to the duration of the franchise agreement. After the agreement ends, they cannot challenge Bhc's ownership or validity of these assets. This is a standard clause in many franchise agreements, as franchisors need to protect their brand and proprietary information. Franchisees should seek legal counsel to fully understand the implications of this clause before signing the franchise agreement.
This restriction also applies to Master Franchisees. The Master Franchisee agrees that during the term of the Franchise, and after any assignment, expiration, or termination of the Franchise, the Master Franchisee will not, directly or indirectly, commit an act of infringement or contest or aid others in contesting the validity, distinctiveness, secondary meaning, ownership or enforceability of the Marks or Intellectual Property, or take any other action in derogation of the Marks or Intellectual Property.