If a Bhc Subfranchisee acts inconsistently with the terms of the Franchise Agreement, who is deemed to be in breach of the agreement?

According to Bhc's 2025 Franchise Disclosure Document, if a Subfranchisee acts inconsistently with the terms of the Franchise Agreement or any Subfranchise Agreement, the Master Franchisee will be deemed in breach of their agreement with Bhc. The Master Franchisee is responsible for ensuring that each Subfranchisee complies with their Subfranchise Agreement at all times. They must also notify Bhc promptly in writing if there is any breach of any term of any Subfranchise Agreement and/or the Master Franchise Agreement, and in any event, no later than fourteen (14) days of any such occurrence.

This means that the Master Franchisee bears the responsibility for the actions of their Subfranchisees. It is crucial for potential Master Franchisees to carefully vet and monitor their Subfranchisees to ensure compliance with all agreements. Failure to do so could result in the Master Franchisee being held liable for the Subfranchisee's actions and potentially lead to a breach of the Master Franchise Agreement.

This type of arrangement, where the Master Franchisee is responsible for the actions of Subfranchisees, is common in master franchising. It allows Bhc to maintain brand standards and consistency across all locations, even those operated by Subfranchisees. The Master Franchisee acts as an intermediary, ensuring that Subfranchisees adhere to the required standards and procedures. This structure helps Bhc expand its brand while maintaining control over its operations.