What happens to any goodwill associated with the Marks upon expiration or termination of the Bhc franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
It is expressly understood and agreed that ownership and title of the Trade Dress, Operations Manual and Franchisor's other manuals, bulletins, instruction sheets, forms, methods of operation and goodwill are and, as between Master Franchisee and Franchisor, remain vested solely in Franchisor, and the use thereof is only co-extensive with the term of this Agreement.
- (c) Master Franchisee agrees that during the term of the Franchise, and after any assignment, expiration or termination of the Franchise, Master Franchisee will not, directly or indirectly, commit an act of infringement or contest or aid others in contesting the validity, distinctiveness, secondary meaning, ownership or enforceability of the Marks or Intellectual Property, or take any other action in derogation of the Marks or Intellectual Property, and that no monetary amount will be assigned as attributable to any goodwill associated with Master Franchisee's use of the System, the Marks or Intellectual Property.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, any goodwill associated with the use of Bhc's marks and intellectual property remains vested solely in Bhc. The franchisee acknowledges that their use of the marks benefits Bhc, and they do not acquire any rights to the marks beyond the license granted during the franchise term. Upon termination or expiration of the franchise agreement, the franchisee must discontinue using the marks and cannot operate under any name that implies association with Bhc.
Specifically, the franchisee cannot assign any monetary value to goodwill associated with their use of the Bhc system, marks, or intellectual property. This means that upon termination or expiration, the franchisee cannot claim or receive compensation for any goodwill they may have built up in the business related to the Bhc brand. This is a standard practice in franchising, as the brand and associated goodwill are considered the franchisor's property.
Furthermore, the franchisee is obligated to remove all signs bearing Bhc's marks, erase the marks from all materials, and discontinue any advertising implying association with Bhc. They must also assign all telephone numbers and social media listings to Bhc. These obligations ensure a clean break and prevent any confusion among customers after the franchise relationship ends. The franchisee must also contact online review sites and other online directories and websites which have made reference to Franchisee's Franchised BHC Restaurant during the 18 months prior to the date this Agreement terminates, is cancelled, or expires, and request the removal of all use of the trademarks in connection with the former BHC Franchised BHC Restaurant (and the physical address of the former Franchised BHC Restaurant) and all use of former reviews from the period Franchisee was a BHC franchisee.
In the event that Bhc chooses to purchase the franchisee's assets after termination, the purchase price will exclude any consideration for goodwill or going concern value. This reinforces that the franchisee does not own the goodwill associated with the Bhc brand and will not be compensated for it. This is a critical point for prospective franchisees to understand, as it affects the potential value they can realize upon exiting the franchise system.