Does the Bhc Master Franchisee need to conduct a background check on potential subfranchisees?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
You will be required to conduct an approval process, including a background check, to confirm that each potential subfranchisee and each potential BHC Restaurant meet all of our then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by us from time to time. We also have the right, upon written notice to you, at our sole discretion, to approve or disapprove any or all potential subfranchisees and potential BHC Restaurants. You may not directly operate any BHC Restaurant under the MFA, but may only do so through an affiliate that enters into a Franchise Agreement with BHC. A "Affiliate Franchised BHC Restaurant" means a BHC Restaurant that is or will be established and operated by an affiliate of the Master Franchisee, and a "Subfranchised BHC Restaurant" means a BHC Restaurant that is or will be established and operated by a Subfranchisee that is a third party and not your affiliate.
Source: Item 1 — The Franchisor, And Any Parents, Predecessors, And Affiliates (FDD pages 7–10)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, as a Master Franchisee, you are required to conduct an approval process, including a background check, to confirm that each potential subfranchisee and each potential Bhc Restaurant meet the franchisor's minimum requirements for new subfranchisees and restaurants. These requirements may be amended or supplemented by Bhc from time to time.
Bhc also retains the right to approve or disapprove any or all potential subfranchisees and potential Bhc Restaurants at its sole discretion, providing an additional layer of oversight. This means that even if a subfranchisee meets your requirements and passes your background check, Bhc can still reject them.
This requirement ensures that all subfranchisees meet Bhc's standards, protecting the brand's reputation and consistency. It also means the Master Franchisee will need to establish procedures for conducting background checks and documenting the approval process for each subfranchisee. The Master Franchisee should maintain open communication with Bhc throughout the subfranchisee approval process to ensure alignment and avoid potential conflicts.