What is the landlord obligated to do regarding default notices under the Bhc lease?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Default and Notices to Franchisor. Landlord shall send Franchisor copies of all notices of default under the Lease at the same time it provides Tenant with such notice. If Tenant fails to cure any defaults within the period specified in the Lease, Landlord shall promptly give Franchisor written notice thereof, specifying the defaults that Tenant has failed to cure. Franchisor has the right to unilaterally assume the Lease if Tenant fails to cure. Franchisor shall have 15 days from the date Franchisor receives such notice to exercise, by written notice to Landlord and Tenant, its right for Franchisor or its affiliate
designee ("Franchisor Entity"), to assume the Lease. Franchisor shall have an additional 30 days from the expiration of Tenant's cure period in which to cure the default or violation. If Franchisor elects to assume the Lease, the Franchisor Entity shall not be required to cure defaults and/or to begin paying rent until Landlord delivers possession of the Premises to the Franchisor Entity. At any time until Landlord delivers possession of the Premises, Franchisor shall have the right to rescind the election to assume by written notice to Landlord.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the landlord has specific obligations regarding default notices. The landlord must send Bhc copies of all default notices under the lease at the same time they are provided to the tenant (the franchisee). If the franchisee fails to correct any defaults within the period specified in the lease, the landlord must promptly provide Bhc with written notice, detailing the defaults that the franchisee has failed to resolve.
This requirement is significant for a prospective Bhc franchisee because it provides Bhc with an opportunity to protect its brand and investment. If a franchisee is struggling and fails to meet lease obligations, Bhc is informed and has the right to step in and assume the lease, preventing potential damage to the brand's reputation and ensuring the location remains operational. Bhc has the right to unilaterally assume the lease if the franchisee fails to cure the default.
Bhc has 15 days from the date of receiving the notice to exercise its right to assume the lease by providing written notice to both the landlord and the tenant. Furthermore, Bhc has an additional 30 days from the expiration of the franchisee's cure period to correct the default or violation. This extended period allows Bhc ample time to assess the situation, make a decision, and take appropriate action. If Bhc chooses to assume the lease, it is not required to cure defaults or begin paying rent until the landlord delivers possession of the premises to Bhc. Bhc also retains the right to rescind its election to assume the lease at any time until the landlord delivers possession of the premises by providing written notice to the landlord.
This arrangement benefits both Bhc and the landlord by ensuring the continuity of the business and minimizing potential losses. For the franchisee, it means that Bhc has a vested interest in their success and will provide support if they encounter difficulties in meeting their lease obligations. However, it also means that the franchisee's performance is closely monitored, and failure to comply with the lease terms can result in Bhc taking over the lease to protect its interests.