What is the franchisee's obligation regarding maximizing the Bhc franchised business within their territory, according to the franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) It is the intention of both Franchisee and Franchisor that Franchisee maximizes the Franchised Business within the Territory, and any action of Franchisee that diverts business to another entity or diminishes the Franchised Business being conducted in the Territory will be a material breach of this Agreement. Accordingly, neither Franchisee nor any Principal Equity Operator may, either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any person, persons, partnership, corporation or other entity, (i) divert or attempt to divert any business or customer of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or (ii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks or the System.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees have a clear obligation to maximize the potential of their franchised business within their designated territory. The franchise agreement explicitly states that it is the intention of both the franchisee and Bhc that the franchisee maximizes the franchised business within the territory. Any actions taken by the franchisee that divert business to another entity or diminish the franchised business within the territory will constitute a material breach of the agreement. This underscores the importance Bhc places on franchisees dedicating their full efforts to growing their Bhc business.
To ensure franchisees are committed to this goal, the agreement prohibits franchisees and their principal equity operators from diverting or attempting to divert any business or customer of the franchised business to any competitor. This includes any direct or indirect inducement. Franchisees are also barred from performing any act that could be injurious or prejudicial to the goodwill associated with Bhc's marks or the system as a whole. This clause is designed to protect Bhc's brand reputation and ensure that franchisees are not engaging in activities that could harm the overall business.
This requirement is fairly standard in franchising, as franchisors rely on each franchisee to actively develop their territory and uphold brand standards. For a prospective Bhc franchisee, this means understanding that their primary focus must be on growing the Bhc business and not engaging in any competing ventures or actions that could negatively impact the brand or divert customers. Franchisees should be prepared to demonstrate a strong commitment to maximizing the potential of their Bhc franchise within their territory.