What happens if the proposed transferee does not meet Bhc's standards for new Master Franchisees?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Master Franchisee must deliver to Franchisor a written notice setting forth (i) all of the terms and conditions of any bona fide offer relating to a proposed Assignment by Master Franchisee, and (ii) all available information concerning Master Franchisee's Assignee including a detailed summary of how the proposed assignee meets Franchisor's qualifications for a new BHC Master Franchisee, and any other related information requested by Franchisor.
If the specified terms and conditions include consideration of a non-monetary nature, such consideration must be expressed in reasonably equivalent monetary terms, and if it involves matters that cannot be stated in monetary terms, such consideration will not be considered in connection with Franchisor's right of first refusal.
(c) Within 15 days after Franchisor's receipt of such notice (or if Franchisor requests additional information, within 10 days after receipt of such additional information), Franchisor may either (i) consent or withhold Franchisor's consent to such Assignment by Master Franchisee, in accordance with section 12.2 hereof, or (ii) at Franchisor's option, accept the Assignment by Master Franchisee itself or on behalf of Franchisor's nominee upon the terms and conditions specified in the notice.
(d) If Franchisor elects not to exercise its right of first refusal and consent to the Assignment by Master Franchisee, Master Franchisee will for a period of 60 days, and subject to the provisions of section 12.2 hereof, be free to assign this Agreement to such proposed Assignee upon the terms and conditions specified in said notice.
If, however, these terms are modified in any material manner (as determined by Franchisor), or if said 60-day period expires, Franchisor will again have such right of first refusal with respect thereto and Master Franchisee will again be required to comply with section 12.3(b) above.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
Based on the 2025 FDD, Bhc requires Master Franchisees to get approval before assigning or transferring their franchise. The prospective transferee must meet Bhc's standards for new Master Franchisees. The Master Franchisee must notify Bhc in writing of their intent to transfer, including the proposed transferee's name and address, copies of all related agreements, and the transferee's application for approval. This application should include all forms, financial disclosures, and related information that Bhc generally uses when interviewing new Master Franchisees, if Bhc makes these forms available. Bhc will communicate its standards for approving new or renewing franchisees to the Master Franchisee within 15 calendar days if those standards are not readily available.
Bhc has the right to either consent to or withhold consent to the assignment. Bhc also has the option to accept the assignment itself or through a nominee, based on the terms and conditions specified in the notice. If Bhc does not exercise its right of first refusal and consents to the assignment, the Master Franchisee is free to assign the agreement to the proposed assignee within 60 days, subject to the conditions outlined in section 12.2 of the agreement. If the terms are modified materially or the 60-day period expires, Bhc has the right of first refusal again, and the Master Franchisee must comply with the notification requirements again.
The FDD excerpt does not explicitly state what happens if the proposed transferee does not meet Bhc's standards. However, it can be inferred that if the proposed transferee does not meet Bhc's standards, Bhc would likely withhold its consent to the assignment. In this case, the Master Franchisee would not be able to transfer the franchise to that particular transferee. The Master Franchisee would either need to find a different transferee who meets Bhc's standards or continue operating the franchise themselves. A prospective franchisee should clarify with Bhc the specific steps and alternatives available if a proposed transferee is rejected.