What happens to a franchisee's rights to the Bhc marks upon expiration or termination of the Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
BHC Korea owns the Trademarks and as described in Item 1, has licensed them to BHC so that we may sublicense them to our franchisees in the United States. The license is in perpetuity. Your use of the mark identified above as well as other trademarks, service marks, trade names and commercial symbols we may authorize in the future (collectively, the "Marks" or "Proprietary Marks"), and any goodwill is pursuant to a license granted to you under the MFA and you retain no further rights in the Marks. You also retain no rights in the Marks upon expiration or termination of your MFA. You are not permitted to make any changes or substitutions of any kind in or to the use of the Marks unless we direct in writing. We may change the System presently identified by the Marks, including the adoption of new Marks, new products, new equipment or new techniques and you must adopt the changes in the System. You must comply within a reasonable time if we notify you to discontinue or modify your use of any Mark. We will have no liability or obligation as to your modification or discontinuance of any Mark.
Source: Item 13 — Trademarks (FDD pages 39–41)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees have no rights to Bhc's trademarks upon expiration or termination of their Master Franchise Agreement (MFA). The use of Bhc's trademarks, service marks, trade names, and commercial symbols is granted to the franchisee under a license within the MFA, but no further rights are retained once the agreement ends. Bhc retains significant rights to the marks, including the ability to grant other licenses, develop other systems using the marks, and engage in the production, distribution, and sale of products and services using the marks.
This means that if a franchisee's agreement expires or is terminated, they must immediately cease using all Bhc trademarks in their business operations. This includes signage, marketing materials, and any other use of the Bhc brand. The franchisee cannot claim any continued association with the Bhc brand after the agreement ends. This is a standard practice in franchising, as the franchisor needs to maintain control over its brand and ensure consistent quality and representation across all franchise locations.
Bhc also has the right to change the system identified by the marks, including adopting new marks, products, equipment, or techniques. Franchisees are obligated to adopt these changes within a reasonable time. If Bhc notifies a franchisee to discontinue or modify the use of any mark, the franchisee must comply, and Bhc assumes no liability for any costs incurred due to such modifications or discontinuations. This highlights the importance of franchisees staying updated with Bhc's evolving brand standards and operational procedures.
Furthermore, franchisees are required to protect Bhc's intellectual property rights, including the marks, by promptly reporting any known or suspected infringement and providing necessary assistance during any related proceedings. Franchisees also cannot use the marks as part of their corporate or legal name and must comply with Bhc's instructions for trade name registrations. This underscores the franchisee's responsibility to safeguard Bhc's brand identity and prevent unauthorized use of its trademarks.