Are Bhc franchisees currently required to participate in a local or regional advertising cooperative?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
at advises us regarding advertising and promotional programs or policies for BHC Restaurants generally.
- (vii) We do not currently require franchisees or Subfranchisees to participate in a local or regional advertising cooperative. No local or regional advertising cooperative exists in our system at this time. We may establish advertising cooperatives comprised of groups of franchisees within regions or areas we designate and may modify boundaries of these groups in our discretion, effective on written notice. You, your Affiliate Franchisee, and your Subfranchisees must participate in any advertising cooperative which encompasses your, your Affiliate Franchisee's, or your Subfranchisees' territory. The members of each cooperative will adopt governing rules and voting procedures and determine procedures for assessing members; however, we have the right to attend any meetings and approve these rules and procedures and any amendments. If any of our affiliates owns a BHC Restaurant within the boundaries of a cooperative, it will contribute to the cooperative at the lowest percentage contribution rate that any BHC franchisee in the same cooperative then pays and will have the same voting rights as franchisee members.
- (viii) We may require a cooperative to merge with another cooperative servicing an adjacent or proximate area, or to subdivide a cooperative into smaller groupings. We may dissolve a cooperative when we simultaneously dissolve all advertising cooperatives. For example, we may determine it is preferable to centralize all group advertising activities under the Marketing and Promotion Fee. Advertising cooperatives must prepare quarterly and annual financial statements, which need not be audited, and make them available to all cooperative members and us. We have no present plan to sell goods or services to any advertising cooperative.
- (ix) The Marketing and Promotion Fee may be used to meet all costs of administering, directing, preparing, placing, and paying for national, regional, or local advertising to promote and enhance the image, identify or patronage of BHC Restaurants owned by us or our affiliates and by franchisees.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, And Training (FDD pages 29–38)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are not currently required to participate in a local or regional advertising cooperative. The FDD states that no such cooperative exists within the Bhc system at this time. However, Bhc retains the right to establish these advertising cooperatives in the future, comprised of groups of franchisees within designated regions or areas, and may modify the boundaries of these groups at their discretion with written notice.
If Bhc establishes advertising cooperatives, franchisees, their affiliate franchisees, and subfranchisees must participate in any cooperative that encompasses their territory. The members of each cooperative will create governing rules and voting procedures to determine how members will be assessed. Bhc retains the right to attend meetings and approve these rules, procedures, and any amendments. Bhc may also require cooperatives to merge, subdivide, or dissolve, especially if they decide to centralize advertising activities under the Marketing and Promotion Fee.
Advertising cooperatives must prepare quarterly and annual financial statements, which do not need to be audited, and make them available to all cooperative members and Bhc. While Bhc has no present plan to sell goods or services to any advertising cooperative, they may impose an assessment on all affected Bhc franchisees for special advertising or promotional activities if franchisees owning two-thirds of all affected franchised Bhc Restaurants agree to this assessment in writing.
Prospective franchisees should be aware that while participation in a cooperative is not currently required, Bhc has the right to implement such a requirement in the future. This could impact franchisees financially and operationally, as they would need to contribute to and participate in the cooperative's activities. It is important for potential franchisees to understand the terms under which these cooperatives may be established and how they would be governed.