Does the Bhc Franchisor or its affiliates receive payments from suppliers based on purchases by Master Franchisees and Subfranchisees?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) Franchisor and Franchisor's affiliates have the right to receive payments, rebates, and other forms of consideration from suppliers based upon Master Franchisee's, Subfranchisees' (and other Master Franchisees' and Subfranchisees') purchases of goods, products, and services as described in this section, as well as in connection with any future purchases of any goods, products, and services. Most of these payments are calculated as an amount based on products sold to Master Franchisee and Franchisor affiliate-owned BHC Restaurants. Franchisor will retain and use such payments as we deem appropriate or as required by the vendor or by manufacturers.
- (h) Franchisor may negotiate prices for numerous products for the benefit of the System but not on behalf of individual Master Franchisees or Subfranchisees. Currently, there is no purchasing or distribution cooperative, but Franchisor reserves the right to create a cooperative and require Master Franchisee and Subfranchisees to participate. Franchisor may receive volume discounts for the System which Franchisor will pass through to the Master Franchisees. Beyond these discounts, Franchisor do not provide material benefits to Master Franchisee because of Master Franchisee's use of approved suppliers.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc and its affiliates do have the right to receive payments from suppliers based on purchases made by Master Franchisees and Subfranchisees. These payments can come in the form of payments, rebates, and other considerations. These payments are often calculated based on the products sold to Master Franchisees, as well as to Bhc affiliate-owned restaurants. Bhc retains and uses these payments as they see fit or as required by the vendor or manufacturers.
This arrangement is common in franchising, where franchisors leverage the collective buying power of their network to negotiate favorable terms with suppliers. These arrangements can create revenue streams for the franchisor beyond royalties and fees paid by franchisees. However, it's important for prospective franchisees to understand how these arrangements work and whether they ultimately benefit the entire system.
Bhc also has the ability to negotiate prices for products for the benefit of the entire system, but not specifically for individual Master Franchisees or Subfranchisees. While there isn't a purchasing cooperative currently, Bhc retains the right to create one in the future and require participation from Master Franchisees and Subfranchisees. Bhc may also receive volume discounts for the system, which they will pass on to the Master Franchisees. Beyond these discounts, Bhc does not provide material benefits to Master Franchisees because of their use of approved suppliers.