If Bhc terminates a franchise agreement for a material breach, what options does Bhc have regarding other agreements with the franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) Any attempt by Master Franchisee to assign the Franchise, all (or substantially all) the assets of the BHC Restaurant, or a controlling interest in Master Franchisee (if an entity) in violation of this section 12.2 is void and will (i) constitute a material breach of this Agreement, (ii) cause this Agreement (and in Franchisor's sole discretion any or all other agreements between Master Franchisee and Franchisor, or between Master Franchisee and Franchisor's affiliates) to be subject to immediate termination without further notice, and (iii) confer no rights or interest whatsoever under this Agreement upon any other party.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if a franchisee attempts to assign the franchise, its assets, or a controlling interest in violation of the agreement, it constitutes a material breach. In such cases, Bhc has the right to immediately terminate the franchise agreement without further notice.
Furthermore, Bhc has the discretion to terminate any or all other agreements between the franchisee and Bhc, or between the franchisee and Bhc's affiliates. This provision gives Bhc broad authority to sever all ties with a franchisee who has committed a material breach by attempting an unauthorized transfer.
This clause is significant for prospective franchisees as it highlights the importance of adhering to the terms of the franchise agreement, particularly regarding assignments or transfers. Failure to comply can result not only in the termination of the franchise agreement but also in the termination of any other agreements in place with Bhc or its affiliates, potentially leading to significant financial and operational disruptions.