What happens if a Bhc franchisee repeatedly fails to comply with material requirements of the agreement, even if corrected after notice?

According to Bhc's 2025 Franchise Disclosure Document, if a franchisee repeatedly fails to comply with one or more material requirements of the Franchise Agreement, Bhc has the right to immediately terminate the agreement without providing an opportunity to cure the noncompliance. This applies whether or not the franchisee corrects the noncompliance after receiving notice. This stipulation is outlined under section 13.2(a)(vii) of the agreement, detailing conditions for immediate termination.

This provision means that even if a Bhc franchisee initially rectifies a breach of the agreement after being notified, repeated instances of failing to meet material requirements can lead to termination. Material requirements would be those obligations that are critical to the operation of the franchise and the protection of the Bhc brand. The franchisee's rights under the agreement are terminated, and Bhc can immediately take action to collect damages or enforce its rights, as specified in sections 14.2 or 14.3 of the agreement.

For a prospective Bhc franchisee, this highlights the importance of maintaining consistent compliance with all aspects of the Franchise Agreement. It's not enough to simply fix problems as they arise; preventing repeated failures is crucial to maintaining the franchise and avoiding termination. This clause underscores the need for strong operational management and adherence to Bhc's standards to ensure long-term success and stability as a franchisee.