Does the Bhc franchisor have to exercise its right of first refusal before disapproving an assignment?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Within 15 days after Franchisor's receipt of such notice (or if Franchisor requests additional information, within 10 days after receipt of such additional information), Franchisor may either (i) consent or withhold Franchisor's consent to such Assignment by Master Franchisee, in accordance with section 12.2 hereof, or (ii) at Franchisor's option, accept the Assignment by Master Franchisee itself or on behalf of Franchisor's nominee upon the terms and conditions specified in the notice.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisor does not have to exercise its right of first refusal before disapproving an assignment. Bhc has the option to either consent or withhold consent to an assignment, or at its option, accept the assignment itself.
Specifically, if a franchisee (or master franchisee) wants to transfer their interest in the franchise, they must provide Bhc with written notice of the terms of the proposed assignment and information about the assignee. Within 15 days of receiving this notice (or 10 days after receiving additional requested information), Bhc has the option to either consent to or withhold consent for the assignment, or to exercise its right of first refusal and accept the assignment itself or through a nominee.
This means Bhc has the flexibility to reject a proposed transfer without having to step in and take over the franchise itself. This protects Bhc's interests by allowing them to maintain control over who becomes a franchisee and ensuring that any new franchisee meets their qualifications. If Bhc chooses not to exercise its right of first refusal and consents to the assignment, the franchisee is then free to assign the agreement to the proposed assignee within a 60-day period, subject to certain conditions.