What is the initial step that Bhc Franchisor and Master Franchisee must take to resolve a dispute?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Franchisor and Master Franchisee have entered into a long-term franchise relationship which gives rise to an obligation, subject to and consistent with the terms of this Agreement, to endeavor to make the relationship succeed, considering the overall best interests of the entire BHC system, as contemplated by this Agreement. To that end, Master Franchisee and Franchisor acknowledge that Master Franchisee and Franchisor need to attempt to resolve disagreements or disputes before such disagreements or disputes negatively impact the relationship. Good faith communications between Master Franchisee and Franchisor are important aspects of that obligation. The parties hereby pledge and agree that they will first attempt to resolve any dispute, claim or controversy arising out of or relating to this Agreement or any alleged breach hereof, including any claim that this Agreement or any part hereof is invalid, illegal or otherwise voidable or void (collectively, "Dispute") by first having Franchisor's executive officers and Master Franchisee's Principal Equity Operators meet in person within five business days after a party notifies the other party that a Dispute has arisen at Franchisor's principal executive office (without their respective legal counsel) to conduct a good faith discussion and negotiation of the issues with the express intention of arriving at a settlement ("Settlement Conference"). Franchisor may proceed to terminate this Agreement in either of the following two situations without a settlement meeting or mediation proceeding: (i) if there is any breach of this Agreement by Master Franchisee that may result in an immediate termination of this Agreement pursuant to section 13.2 above, or (ii) if Master Franchisee fails to pay any sums due Franchisor under this Agreement which may result in termination of this Agreement pursuant to section 13.3 above. Also, if a party refuses to participate in the Settlement Conference or mediation within the respective time frames set forth in this section 14.1, the other party may immediately commence an arbitration proceeding pursuant to section 14.2 below.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, both the Franchisor and Master Franchisee are obligated to try and resolve any disputes that may arise. The initial step in resolving a dispute involves executive officers from Bhc and the Principal Equity Operators of the Master Franchisee meeting in person. This meeting should occur within five business days after one party notifies the other of the dispute.
The purpose of this meeting, held at Bhc's principal executive office, is to conduct a good faith discussion and negotiation aimed at reaching a settlement. Legal counsel is not permitted to attend this initial Settlement Conference. This process underscores the importance of direct communication and negotiation between the key stakeholders to resolve issues promptly and efficiently.
Bhc may proceed to terminate the agreement without a settlement meeting or mediation if the Master Franchisee breaches the agreement resulting in immediate termination, or if the Master Franchisee fails to pay sums due to Bhc that may result in termination. Additionally, if either party refuses to participate in the settlement conference or mediation within the specified timeframes, the other party can immediately begin an arbitration proceeding.