If Bhc develops proprietary software, may franchisees be required to license it?

According to Bhc's 2025 Franchise Disclosure Document, Bhc reserves the right to develop proprietary software and may require franchisees, affiliate franchisees, and subfranchisees to license it from Bhc, an affiliate, or a third party. Franchisees may also be required to pay a software licensing or use fee in connection with the use of the proprietary software. The FDD specifies that all rights, title, and interest in the software will remain with the licensor of the software.

This means that if Bhc develops new software for the franchise system, franchisees could be obligated to adopt it and pay associated licensing fees. This is a fairly standard practice in franchising, as franchisors often update technology to improve efficiency or customer experience. However, it's important to note that the franchisee will not own the software itself, only the right to use it under a license.

Bhc also reserves the right to change the point-of-sale cash register system and back-of-office computer at any time but will not require franchisees to replace these items more than three times during the initial term of the MFA. Bhc also reserves the right to change the software each year. At such time as Bhc designates the change or enhancement to the Computer System, franchisees, affiliate franchisees, and subfranchisees may be required to make certain payments to Bhc or its designated suppliers. Franchisees, affiliate franchisees, and subfranchisees must acquire the right to use hardware, software, peripheral equipment, and accessories, and arrange for installation, maintenance, and support services of the initial, changed, or enhanced Computer System all at their cost. There are no contractual limitations on the frequency and cost of this obligation.

Prospective franchisees should consider these potential costs and obligations when evaluating the Bhc franchise opportunity. It would be prudent to inquire about the typical frequency and cost of software updates and licensing fees to better understand the financial implications.