If the consideration for a Bhc franchise assignment is non-monetary, how should it be handled in the notice to the franchisor?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) 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 Franchisee, and (ii) all available information concerning Franchisee's Assignee including a detailed summary of how the proposed assignee meets Franchisor's qualifications for a new BHC 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.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if a proposed franchise assignment involves non-monetary consideration, the franchisee must express this consideration in reasonably equivalent monetary terms in the written notice to Bhc. If any aspect of the non-monetary consideration cannot be expressed in monetary terms, Bhc will not consider it when exercising its right of first refusal. This requirement applies both to assignments by franchisees and master franchisees.
This means that if a franchisee is exchanging the franchise for something other than money, such as services or assets, they need to determine and declare a reasonable cash value for those items. This valuation allows Bhc to fairly assess the offer when deciding whether to exercise its right of first refusal. If the non-monetary aspects are impossible to value in monetary terms, Bhc will disregard them, potentially simplifying the approval process to focus on quantifiable elements.
This policy protects Bhc's interests by ensuring that it can properly evaluate proposed franchise transfers, even when the deal structures are complex or involve non-cash elements. It also provides clarity for franchisees by setting out a clear procedure for how to handle these types of transactions. Franchisees should document their valuation methods carefully, as Bhc may scrutinize the stated monetary equivalents.