Does the Bhc Franchisor have a right of first refusal regarding the transfer of a non-controlling interest?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.2 Assignment by Master Franchisee.
- (a) This Agreement is being executed by Franchisor in reliance upon and in consideration of the unique skills and qualifications of Master Franchisee and the Principal Equity Operators and the trust and confidence reposed in them by Franchisor. Therefore, neither Master Franchisee's interest in this Agreement and the Franchise granted hereunder, nor all or substantially all of the assets of the BHC Restaurant, nor a controlling or non-controlling interest in Master Franchisee (if an entity), may be assigned, transferred, shared or divided, voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, in any manner (collectively, "Assignment by Master Franchisee"), without Franchisor's prior written consent and, except for any transfer of a non-controlling interest, subject to Franchisor's right of first refusal provided for in section 12.3 hereof, and transfer to an Affiliated Entity provided for in section 12.6 hereof. Franchisor's consent to a specific Assignment by Master Franchisee is not cumulative and will not apply to any subsequent assignments, in respect of each of which Master Franchisee must comply with this section 12.2.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisor's right of first refusal concerning the transfer of interests depends on whether the franchisee is a standard franchisee or a master franchisee. For a standard franchisee, the franchisor has a right of first refusal for the transfer of the franchisee's entire interest in the franchise. However, the document does not explicitly state whether this right of first refusal extends to the transfer of a non-controlling interest in the franchisee's entity.
For master franchisees, Bhc retains a right of first refusal except for any transfer of a non-controlling interest. This means a master franchisee can transfer a non-controlling interest without triggering the franchisor's right to step in and purchase the interest themselves.
Therefore, prospective franchisees should seek clarification from Bhc regarding whether the right of first refusal applies to transfers of non-controlling interests for standard franchisees, as the FDD excerpt does not provide explicit details on this matter. This clarification is crucial for understanding the full scope of transfer restrictions and obligations under the franchise agreement.