What is the impact of failing to acknowledge in writing that inactivity is due to causes beyond the Master Franchisee's control for a Bhc franchise?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
conditions contained in this Agreement, and other good and valuable consideration, Master Franchisee and Franchisor hereby agree as follows.
1. DEFINITIONS
"Abandoned" means cessation of operation of the Franchised Business for a period of five consecutive business days, without Franchisor's prior written consent. A repeated pattern of inactivity at Master Franchised BHC Restaurant for periods of less than five consecutive business days may result in the Franchised Business being deemed Abandoned by Master Franchisee if in Franchisor's judgment such inactivity adversely impacts the Franchised Business. However, Master Franchised BHC Restaurant will not be deemed Abandoned if the inactivity is due to natural disasters or other matters reasonably beyond Master Franchisee's control, provided that Master Franchisee gives Franchisor notice of any such closure within five business days after the initial occurrence of the event resulting in such inactivity, and Master Franchisee acknowledges in writing that such inactivity is due to one of the foregoing causes, and provided further that Master Franchisee re-establish the Franchised Business and be fully operational within 180 days after the initial occurrence of the event resulting in such inactivity, or such longer period as Franchisor may permit.
- "Affiliate" means in relation to a party, any Person Controlling, Controlled by or under common Control with such party, either directly or indirectly through one or more intermediaries.
- "Franchised BHC Restaurant" means a BHC Restaurant that is or will be established and operated by an Affiliate of Master Franchisee.
- "Agreement" means this Multi-Unit Master Franchise Agreement and all instruments amending this Multi-Unit Master Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee's BHC Restaurant can be deemed 'Abandoned' if operations cease for five consecutive business days without the Franchisor's prior written consent. Even a repeated pattern of inactivity for less than five consecutive business days can lead to the business being deemed abandoned if Bhc believes it adversely impacts the franchise.
However, the document specifies an exception: the restaurant will not be considered abandoned if the inactivity stems from natural disasters or other situations reasonably beyond the Master Franchisee's control. To qualify for this exception, the Master Franchisee must notify Bhc of the closure within five business days of the event and acknowledge in writing that the inactivity is due to such causes. Additionally, the Master Franchisee must resume full operations within 180 days of the event, unless Bhc grants a longer period.
Therefore, if a Master Franchisee fails to provide written acknowledgment that the inactivity is due to causes beyond their control, the BHC Restaurant could be deemed 'Abandoned' by Bhc. According to section 13.2(a)(ii), Bhc has the right to immediately terminate the agreement if the Master Franchisee abandons the franchise by failing to operate the BHC Restaurant for five consecutive business days, unless such failure to operate is due to fire, flood, earthquake or other similar causes beyond Master Franchisee's control.