Will Bhc guarantee a franchisee's leases?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
hised BHC Restaurant and issue a written consent to open. Any deficiencies noted by Franchisor as a result of this inspection must be corrected by Franchisee within 30 days or this Agreement may be terminated without any liability to Franchisor. Franchisee shall be responsible for such inspection fee of USD $600, all accommodation, transportation, meals, daily allowances, and other costs and expenses for the Franchisor's personnel in connection with such visits on site but up to three times per Franchised BHC Restaurant only.
- (g) Unless otherwise agreed to in writing by Franchisee and Franchisor, Franchisee has the sole responsibility for locating, securing, and obtaining suitable premises for Franchisee's Franchised BHC Restaurant. Franchisee and Franchisee's landlord will be required by Franchisor to execute an addendum to Franchisee's lease (or other written agreement or written understanding incorporated in, or attached as a rider to, the lease) that (i) grants Franchisor an option to assume Franchisee's position as lessee under the lease for the Franchised BHC Restaurant premises if Franchisee is in material breach of either the lease for the Franchised BHC Restaurant premises (including an obligation of the landlord to notify Franchisor if Franchisee is in such breach) or this Agreement, (ii) grants Franchisor the right to assign the lease to a bona fide franchisee of the System after assuming the lease, and (iii) requires the landlord to fully cooperate with Franchisor in completing de-identification of the Franchised BHC Restaurant if this Agreement is terminated or expires without being renewed and Franchisor does not exercise its option to assume the lease for the Franchised BHC Restaurant premises. The Addendum to Lease is attached as Exhibit 5.
- (h) Franchisor has the right to regularly inspect Franchisee's Franchised BHC Restaurant and any other site where Franchisee conducts the Franchised Business.
7.3 Equipment and Inventory.
(i) Throughout the term of this Agreement, Franchisee must purchase, and maintain equipment and inventory as needed to meet reasonably anticipated consumer demand of the BHC Products. Franchisee must also purchase and sell ancillary products, which may include books, specialty foods, packaged foods, books, hats, t-shirts, and novelty items, as we periodically specify, for sale at your Franchised BHC Restaurant ("Ancillary Products").
Source: Item 10 — Financing (FDD page 29)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are generally responsible for securing their own premises. However, Bhc requires that an addendum to the lease agreement be in place. This addendum grants Bhc the option to assume the franchisee's position as lessee if the franchisee materially breaches the lease or the Franchise Agreement. The addendum also allows Bhc to assign the lease to another qualified Bhc franchisee.
The lease addendum also requires the landlord to cooperate with Bhc to de-identify the restaurant if the Franchise Agreement terminates or expires and Bhc does not assume the lease. This ensures that the location will no longer be associated with the Bhc brand if the franchisee exits the business and Bhc does not take over the lease.
For Master Franchisees, the same conditions apply. Unless otherwise agreed to in writing by the Master Franchisee and Bhc, the Master Franchisee is responsible for finding and securing a suitable location. The lease agreement must include an addendum that allows Bhc to assume the lease under certain conditions, such as a breach of the lease or Franchise Agreement by the Master Franchisee. This addendum also allows Bhc to assign the lease to another Master Franchisee and requires the landlord to cooperate with de-identification of the restaurant if necessary.