Can the Master Franchisee directly operate Bhc Restaurants under the agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 directly operate Bhc restaurants under the Master Franchise Agreement. Instead, they can only operate through an Affiliate Franchisee that enters into a Subfranchise Agreement with the Master Franchisee. An Affiliate Franchisee is defined as a person or entity controlled by, controlling, or under common control with the Master Franchisee.
Before granting subfranchises to third parties, the Master Franchisee must first establish and operate at least one Affiliate Franchised Bhc Restaurant within the designated Development Area. This initial establishment must be done under a separate Subfranchise Agreement. The Master Franchisee is responsible for ensuring that any potential Subfranchisee and their proposed Bhc restaurant meet Bhc's minimum requirements for new subfranchisees and restaurants.
Bhc also retains the right to approve any potential Subfranchisees and restaurant locations. This process ensures that all Subfranchisees meet the brand's standards and operational requirements. This structure allows the Master Franchisee to expand the Bhc brand within their territory while maintaining quality control and adherence to Bhc's standards.