If Bhc assigns the Franchise Agreement to another entity, what happens to Bhc's obligations under the agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor has the right to Transfer this Agreement and all of Franchisor's rights and privileges hereunder ("Assignment by Franchisor") to any other person, firm, or corporation ("Franchisor's Assignee"). Upon the effective date of the Assignment by Franchisor and thereafter, Franchisor will be relieved of all obligations or liabilities under this Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc has the right to transfer the Franchise Agreement to another entity. Upon the effective date of this transfer, Bhc will be relieved of all obligations and liabilities under the agreement. This means that once the assignment is complete, Bhc is no longer responsible for any of the duties or debts outlined in the Franchise Agreement.
For a prospective franchisee, this clause is important because it clarifies that the relationship is with Bhc or its assignee. If Bhc sells the franchise system, the new owner assumes the responsibilities of the franchisor. This is a fairly standard clause in franchise agreements, as it allows the franchisor to sell the business without remaining liable for the obligations of the franchise agreements.
It is important for a franchisee to understand who the current franchisor is and to conduct due diligence on any potential new franchisor in the event of an assignment. While the terms of the Franchise Agreement should remain the same, the new franchisor's capabilities and vision could impact the franchise system. Franchisees should seek legal counsel to fully understand their rights and obligations in the event of an assignment.