Is the Master Franchisee discharged from obligations under the Master Franchise Agreement by entering into a Subfranchise Agreement with Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(d) Furthermore, Master Franchisee:
- i. undertakes to ensure that each Subfranchisee complies with the respective Subfranchise Agreement at all times, and to notify Franchisor promptly in writing if there is any breach of any term of any Subfranchise Agreement and/or this Agreement and, in any event, no later than fourteen (14) days of any such occurrence. Master Franchisee agrees that any act or omission of any Subfranchisee which is inconsistent with the terms of this Agreement or any Subfranchise Agreement will be deemed a breach of this Agreement by Master Franchisee;
- ii. is not discharged or relieved from any obligation or liability arising under this Agreement by entering into any Subfranchise Agreement;
- iii. is liable to Franchisor for the acts, omissions, defaults and negligence of each Subfranchisee, or each Subfranchisee's personnel, as fully as if they were the acts, defaults or negligence of Master Franchisee or Master Franchisee's personnel.
- iv. shall ensure that each Subfranchisee uses its best efforts to include express provisions in any lease agreement it enters into with a landlord for a BHC Restaurant to give Master Franchisee the right to receive notice of any breach of the lease agreement, the right, but not the obligation, to cure any such breach, and the right, but not the obligation, to have the lease agreement
transferred, assigned or novated to Master Franchisee upon a breach of the lease agreement or the expiration or termination of the respective Subfranchise Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is not discharged or relieved from any obligation or liability arising under the Master Franchise Agreement by entering into a Subfranchise Agreement. This means that even though the Master Franchisee grants rights to a Subfranchisee to operate a Bhc restaurant, the Master Franchisee remains responsible to Bhc for fulfilling all the obligations outlined in the Master Franchise Agreement.
Specifically, the Master Franchisee is responsible for ensuring that each Subfranchisee complies with their Subfranchise Agreement at all times. The Master Franchisee must notify Bhc promptly in writing if there is any breach of any term of any Subfranchise Agreement and/or the Master Franchise Agreement, and in any event, no later than fourteen (14) days of any such occurrence. Any act or omission of any Subfranchisee that is inconsistent with the terms of the Master Franchise Agreement or any Subfranchise Agreement will be considered a breach of the Master Franchise Agreement by the Master Franchisee.
Furthermore, the Master Franchisee is liable to Bhc for the acts, omissions, defaults, and negligence of each Subfranchisee, or each Subfranchisee's personnel, as if they were the acts, defaults, or negligence of the Master Franchisee or the Master Franchisee's personnel. The Master Franchisee must also ensure that each Subfranchisee uses its best efforts to include express provisions in any lease agreement it enters into with a landlord for a Bhc Restaurant to give the Master Franchisee the right to receive notice of any breach of the lease agreement, the right to cure any such breach, and the right to have the lease agreement transferred to the Master Franchisee upon a breach or termination of the Subfranchise Agreement.