Can a Bhc franchisee face competition from other franchisees or Bhc-owned restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
, accounts and other information as we may require relating to the potential premises.
Item 12: Territory
We will grant you the right to operate a Master Franchise Business within a specific Development Area described in Appendix I of the MFA. In establishing the geographic territory or territories that will make up your Development Area, we will analyze the size, population and number of DMAs located within the proposed geographic territory or territories. We grant you a franchise for a specific location, which we must approve according to site selection procedures described in Item 11 of this Disclosure Document. You may face competition from other franchisees, from BHC Restaurants that we own, or from other channels of distribution or competitive brands that we control. All territories granted by us are subject to exceptions and reservations.
As further described in Item 1, under the MFA, we grant to you within the Development Area both Development Rights (the right to grant subfranchises to Subfranchisees for the establishment and operation of Master Franchised BHC Restaurants) and Operating Rights (the right to own and operate (through Affiliate Franchisee) Master Franchised BHC Restaurants once opened, and to support, and receive fees from, as applicable, all existing Master Franchised BHC Restaurants within the Development once opened). You may not directly operate Master Franchised BHC Restaurants under the MFA, but may only do so through an affiliate that enters into a then-current Franchise Agreement with us. In addition, you must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before you may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
If you enter into an MFA with us, we will not establish or franchise anyone else to establish any BHC Restaurant in the Development Area up to the earlier of: (i) the expiration or termination of the MFA. The Development Area generally consists of a city or a portion of a city. Captive locations will be excluded from your Designated Area, and we have the right to develop or franchise the following captive locations: (1) military bases; (2) public transportation facilities; (3) sports facilities, including race tracks; (4) student unions or other similar buildings on college or university campuses; (5) amusement and theme parks; (6) malls; (7) special events; (8) hospitals; (9) hotel, resort, or other lodging facility; (10) state or national parks; (11) exhibition hall; conference facility or convention center; (12) casino or gambling establishment; (13) esports events and venues; (14) street fairs; (15) delivery facilities (e.g.,, ghost kitchens) or (16) any similar area to the sites referenced herein (individually and collectively, "Captive Location(s)).We may not alter the Development Area without your written agreement. However, we may
terminate the MFA if you (i) fail to meet the Development Schedule; (ii) fail to comply with any other terms and conditions of the MFA; (iii) make or attempt to make a transfer or assignment in violation of the MFA; or (iv) fail to comply with the terms and conditions of any individual MFA or of any other agreement to which you and we or our affiliates are parties.
Source: Item 12 — Territory (FDD pages 38–39)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee may face competition from several sources. Bhc states that franchisees may face competition from other franchisees, from Bhc Restaurants that they own, or from other channels of distribution or competitive brands that they control. All territories granted by Bhc are subject to exceptions and reservations. This means that while Bhc grants a specific Development Area, the franchisee's rights are not absolute, and Bhc retains the ability to operate or franchise other businesses that could compete.
Bhc also reserves the right to market and sell Bhc Products and Ancillary Products under their Proprietary Trademarks or different trademarks at venues other than Master Franchise Bhc Restaurants and through other channels of distribution (including the Internet), within the franchisee's Territory and anywhere else. Bhc is not required to pay the franchisee compensation for soliciting or accepting orders in their Territory at venues other than Master Franchise Bhc Restaurants or through other channels of distribution. This broad reservation of rights allows Bhc to explore alternative distribution methods without compensating the franchisee, potentially impacting the franchisee's revenue.
Furthermore, Bhc may develop or franchise Captive Locations, such as military bases, public transportation facilities, sports facilities, college campuses, amusement parks, malls, and other similar areas, even within a franchisee's designated area. While Bhc will not establish or franchise anyone else to establish any Bhc Restaurant in the Development Area, this is only up to the earlier of the expiration or termination of the MFA. The continuation of the franchisee's exclusive rights to develop Master Franchised Bhc Restaurants depends on meeting the development schedule described in the MFA. Failing to meet the development schedule or comply with other terms of the MFA can result in termination of the agreement, potentially opening the territory to other franchisees or company-owned operations.