What is the geographic radius of the non-competition covenant for Bhc after the termination or assignment of the Multi-Unit Master Franchise Agreement?

According to Bhc's 2025 Franchise Disclosure Document, after the termination or assignment of the Multi-Unit Master Franchise Agreement, franchisees are subject to a non-competition covenant. This covenant restricts them from engaging in any competing business for a period of two years. The geographic scope of this restriction extends to within 25 miles of the franchisee's Master Franchised Bhc Restaurant, as well as any other Master Franchised Bhc Restaurant or other retail location. This obligation also applies if the franchisee assigns their franchise.

This non-competition clause is a standard practice in franchising, designed to protect Bhc's market share and brand integrity. The 25-mile radius aims to prevent former franchisees from leveraging their knowledge of Bhc's operations to directly compete with existing locations. The inclusion of "any other Master Franchised Bhc Restaurant or other retail location" broadens the scope, ensuring that franchisees cannot simply move a short distance to circumvent the restriction.

Prospective franchisees should carefully consider the implications of this non-competition covenant. It could significantly limit their business opportunities if they decide to leave the Bhc system. It is important to note that this provision is subject to state law, which may impose additional restrictions or limitations on the enforceability of non-compete agreements. Franchisees should seek legal counsel to understand how these laws apply in their specific jurisdiction.