Is a Bhc franchisee allowed to distribute or resell supplies to third parties?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of clarification, except as otherwise provided in the MFA or in writing by us, you and your Affiliate Franchisee must purchase all BHC Products from BHC, and your Subfranchisees shall purchase all BHC Products to be used and sold from their Master Franchised BHC Restaurants from BHC or our affiliates. You may not, and must ensure that your Subfranchisees do not, distribute, sell, resell, supply, license, sublicense, lease, rent, loan, market, provide access to, make available or transfer any Supplies to any third party.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 25–28)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from distributing or reselling supplies to third parties. The FDD states that franchisees, along with their Affiliate Franchisees and Subfranchisees, cannot distribute, sell, resell, supply, license, sublicense, lease, rent, loan, market, provide access to, make available, or transfer any supplies to any third party. This restriction is in place to maintain the consistency and quality of products within the Bhc system.
This restriction has significant implications for prospective franchisees. It means that a Bhc franchisee's business is limited to selling directly to consumers from their franchised restaurant. They cannot, for example, sell supplies to other restaurants, retailers, or distributors. This limitation ensures that all products used and sold within the Bhc network are sourced directly from Bhc or its designated suppliers, helping to maintain quality control and brand consistency.
This type of restriction is common in franchising, particularly in the food service industry, where brand consistency and quality control are paramount. Franchisors often require franchisees to purchase supplies from approved sources to ensure that all locations meet the franchisor's standards. While this may limit a franchisee's autonomy in sourcing supplies, it also provides a level of assurance that the products they are using meet the brand's specifications and quality standards. Prospective franchisees should carefully consider these restrictions and their potential impact on their business operations and profitability.
Bhc franchisees are also obligated to ensure that their Subfranchisees adhere to the same restrictions, reinforcing the importance of maintaining control over the supply chain within the franchise network. This obligation extends to purchasing all BHC Products from BHC or its affiliates, further solidifying the control Bhc has over its product distribution.