Can a Bhc Master Franchisee assign a controlling interest in the Master Franchisee entity without the Franchisor's consent?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
this Agreement and all of Franchisor's rights 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). As soon as practicable after the receipt of the proposed transferee's application, Franchisor will notify, in writing, Master Franchisee and the proposed transferee of any additional information or documentation necessary to complete the transfer application.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee cannot assign a controlling interest in the Master Franchisee entity without prior written consent from Bhc. Bhc emphasizes that the agreement is executed based on the unique skills, qualifications, and trust in the Master Franchisee and its Principal Equity Operators.
Specifically, the FDD states that neither the Master Franchisee's interest in the agreement, the assets of the BHC Restaurant, nor a controlling interest in the Master Franchisee entity can be assigned, transferred, shared, or divided without Bhc's prior written consent. Attempting to do so without consent constitutes a material breach of the agreement, potentially leading to immediate termination of the agreement and other agreements between the Master Franchisee and Bhc. The unauthorized transfer would also confer no rights or interest to any other party.
Prior to any proposed assignment, the Master Franchisee must notify Bhc in writing. This notification must include the proposed transferee's name and address, copies of all agreements related to the transfer, and the proposed transferee's application for approval, including financial disclosures and related information typically used by Bhc when interviewing new Master Franchisees. This ensures Bhc has the opportunity to evaluate the proposed transferee and protect its interests.
Bhc also retains a right of first refusal, meaning that before a Master Franchisee can transfer their interest, Bhc has the option to purchase the franchise on the same terms. This provision does not apply to transfers to heirs or personal representatives in the event of death or legal incapacity. These restrictions are typical in franchising to maintain brand consistency and ensure qualified operators.