Is the Bhc Master Franchise Agreement binding upon the Master Franchisee's assigns, considering the restrictions on assignment?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
hts and privileges hereunder ("Assignment by Franchisor") to any other person, firm, or corporation ("Franchisor's Assignee"). Upon the effective date of the Assignment by Franchisor and thereafter, Franchisor will be relieved of all obligations or liabilities under this Agreement.
12.2 Assignment by Master Franchisee.
(a) This Agreement is being executed by Franchisor in reliance upon and in consideration of the unique skills and qualifications of Master Franchisee and the Principal Equity Operators and the trust and confidence reposed in them by Franchisor. Therefore, neither Master Franchisee's interest in this Agreement and the Franchise granted hereunder, nor all or substantially all of the assets of the BHC Restaurant, nor a controlling or non-controlling interest in Master Franchisee (if an entity), may be assigned, transferred, shared or divided, voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, in any manner (collectively, "Assignment by Master Franchisee"), without Franchisor's prior written consent and, except for any transfer of a non-controlling interest, subject to Franchisor's right of first refusal provided for in section 12.3 hereof, and transfer to an Affiliated Entity provided for in section 12.6 hereof. Franchisor's consent to a specific Assignment by Master Franchisee is not cumulative and will not apply to any subsequent assignments, in respect of each of which Master Franchisee must comply with this section 12.2.
(b) Prior to any Assignment by Master Franchisee, Master Franchisee must notify Franchisor of Master Franchisee's intent to sell, transfer or assign the Franchise, all (or substantially all) the assets of the BHC Restaurant, or a controlling or non- controlling interest in Master Franchisee (if an entity). The notice must be in writing, delivered to Franchisor in accordance with section 16.1 hereof and include the following:
(i) the proposed transferee's name and address;
(ii) a copy of all agreements related to the sale, assignment, or transfer of the Franchise, the assets of the BHC Restaurant, or the controlling interest in Master Franchisee (if an entity); and
(iii) the proposed transferee's application for approval to become the successor Master Franchisee (this application must include all forms, financial disclosures and related information generally used by Franchisor when interviewing prospective new Master Franchisees, if Franchisor makes those forms available to Master Franchisee. If the forms are not readily available, Master Franchisee must request that Franchisor deliver the forms to Master Franchisee by business courier in accordance with section 16.1 hereof within 15 calendar days).
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Master Franchise Agreement's binding nature on the Master Franchisee's assigns is heavily restricted. Bhc emphasizes that the agreement is executed based on the unique skills and qualifications of the Master Franchisee and the Principal Equity Operators.
Bhc requires the Master Franchisee to obtain prior written consent from Bhc before any assignment, transfer, sharing, or division of the agreement, the BHC Restaurant's assets, or any interest in the Master Franchisee entity. This applies whether the action is voluntary or involuntary. Bhc also retains the right of first refusal, excluding transfers to heirs or representatives upon death or incapacity. Consent to one assignment does not waive Bhc's right to approve future assignments.
Any attempt to assign the franchise in violation of these terms is considered void and a material breach of the agreement. Such a breach could lead to immediate termination of the agreement and any other agreements between the Master Franchisee and Bhc, or its affiliates. Furthermore, it would confer no rights or interests to any other party under the agreement. Upon Bhc's approval of an assignment, the Master Franchisee must ensure all accounts with Bhc are current and transfer all service agreements to the assignee. The Master Franchisee must also execute an agreement among themselves, Bhc, and the assignee, including a mutual release, and assign the lease for the BHC Restaurant premises to the assignee.