What is the Master Franchise Agreement that grants the right to develop and operate a Bhc Restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
erated in accordance with the provisions of BHC franchise agreements and Franchisor's Operations Manual, as periodically amended.
3. GRANT OF MASTER FRANCHISE
3.1 Grant of Master Franchise.
Subject to the terms and conditions of this Agreement, Franchisor hereby grants to Master Franchisee:
- (a) the exclusive, non-transferable right and license to, (a) establish and operate at least one (1) Franchised BHC Restaurant through Master Franchisee's Affiliate, and (b) after opening at least one (1) Affiliate Franchised BHC Restaurant, to grant subfranchises to Subfranchisees to establish and operate Subfranchised BHC Restaurants in accordance by entering Subfranchise Agreements to establish and operate BHC Restaurants using the BHC System and IP Rights, and in accordance with the Operating Manuals ("Development Rights") with the schedule of openings attached hereto as Exhibit 1 (the "Development Schedule") and within the geographical area (the "Development Area") indicated in the Development Schedule.
- (b) So long as Master Franchisee's obligations under the Development Schedule are being met on a timely basis and until this Agreement terminates, Franchisor will not itself operate a BHC Restaurant within the Development Area, nor allow any of its affiliates or other BHC franchisees to do so. Captive locations will be excluded from Master Franchisee's Development Area and Franchisor has the right to develop or franchise the following Captive location locations: (1) military bases; (2) public transportation facilities; (3) sports facilities, including race tracks; (4) student unions or other similar buildings on college or university campuses; (5) amusement and theme parks; (6) malls; (7) special events; (8) hospitals; (9) hotel, resort, or other lodging facility; (10) state or national parks; (11) exhibition hall; conference facility or convention center; (12) casino or gambling establishment; (13) esports events and venues; (14) street fairs; (15) delivery facilities (e.g.,, ghost kitchens) or (16) any similar area to the sites referenced herein n (collectively, "Captive locations"). Franchisor may not alter the Development
Area without Franchisee's written agreement. However, Franchisor may terminate the MFA if Master Franchisee (i) fails to meet the Development Schedule; (ii) fail to comply with any other terms and conditions of this Agreement; (iii) make or attempt to make a transfer or assignment in violation of this Agreement; or (iv) fail to comply with the terms and conditions of any individual Franchise Agreement or of any other agreement to which Master Franchisee and Franchisor or its affiliates are parties.
3.2 Subfranchise Rights and Obligation.
- (a) Prior to appointing any Subfranchisee, including an affiliate of Master Franchisee, Master Franchisee shall conduct an approval process to confirm that each potential Subfranchisee and each potential Subfranchised BHC Restaurants meets all of Franchisor's then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by Franchisor from time to time. Franchisor also reserves the right to approve any or all potential Subfranchisees and potential BHC Restaurants. Each potential Subfranchisee that Master Franchisee approves and Franchisor approves, to the extent Franchisor exercises its approval right, shall be referred to herein as a "Subfranchisee." For purposes of clarification, Master Franchisee may not directly operate BHC Restaurants under this Agreement, but may only do so through an Affiliate Franchisee that enters into a then-current Subfranchise Agreement with Master Franchisee. An "Affiliate Franchisee" means in relation to a Master Franchisee, any person controlling, controlled by or under common control with Master Franchisee, either directly or indirectly through one or more intermediaries. In addition, Master Franchisee must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before Master Franchisee may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area. To the extent Franchisor exercises its approval rights under this paragraph, Franchisor's approval of any potential Subfranchisee or potential BHC Restaurant is in no way a guarantee as to the success of that potential Subfranchisee or potential BHC Restaurant, but only an indication that the potential Subfranchisee or potential BHC Restaurant generally meets Franchisor's then-current minimum requirements.
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 grants the Master Franchisee the exclusive, non-transferable right and license to establish and operate at least one Franchised Bhc Restaurant through their Affiliate. After opening at least one Affiliate Franchised Bhc Restaurant, the Master Franchisee can grant subfranchises to Subfranchisees to establish and operate Subfranchised Bhc Restaurants. This is done by entering into Subfranchise Agreements to establish and operate Bhc Restaurants using the Bhc System and IP Rights, in accordance with the Operating Manuals and the Development Schedule within a specific Development Area.
The agreement specifies that as long as the Master Franchisee meets the obligations under the Development Schedule, Bhc will not operate a Bhc Restaurant within the Development Area, nor allow its affiliates or other Bhc franchisees to do so. However, there are exceptions for "Captive locations" such as military bases, transportation facilities, sports facilities, college campuses, amusement parks, malls, and other similar venues, where Bhc reserves the right to develop or franchise. The franchisor may not alter the Development Area without the franchisee's written agreement.
The Master Franchisee must open at least one Franchised Bhc Restaurant before granting rights to third-party Subfranchisees. The exact location of this initial restaurant will be specified in an updated Exhibit 1 to the agreement once determined. The Master Franchisee is responsible for securing a location acceptable to Bhc within four months of the agreement's effective date. Bhc has the right to cancel the agreement if the Master Franchisee fails to find an acceptable site within this timeframe.
The initial term of the Master Franchise Agreement is 10 years from the effective date, with renewal options for additional 10-year terms if the Master Franchisee meets certain conditions, including solvency and compliance with the agreement. Failure to comply with the Franchise Agreement can result in termination of the Master Franchise Agreement, and vice versa. The Master Franchisee is licensed only for the operation of the Franchised Business within their Development Area and must offer only Bhc Products and other goods and services that Bhc designates as required or approved.