For a Bhc Master Franchisee, what is the relationship between the Development Area and the granting of subfranchises?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
are defined below).
Under the MFA, you will be granted the right and license: (i) to grant subfranchises for the establishment and operation of BHC Restaurants, as defined below, within the Development Area ("Development Rights") to third party subfranchisees that meet our requirements ("Subfranchisees") by entering into Subfranchise Agreements (as defined below) ("Subfranchised BHC Restaurants"); and (ii) to directly own and operate through an affiliate of the Master Franchisee ("Affiliate Franchisee") ("Affiliate Franchised BHC Restaurants") within the Development Area once opened, and to support, and receive fees from, as applicable, all Master Franchised BHC Restaurants within the Development Area once opened ("Operating Rights").
"BHC Restaurant(s)" means a single retail dine-in, carry-out, drive-thru, and delivery restaurant, serving classic Korean flavor fried chicken (e.g., Korean cheese seasoning, Korean soy sauce, sweet & spicy sauce), sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories, using designated concepts, designs, recipes, authorized equipment, and techniques.
"BHC Products" mean any product or service we authorize to be provided at BHC Restaurants under the System, as we may amend from time to time, with the understanding that any such products and services, including pre-packaged or ready-to-drink products and/or related merchandise or services, may only be offered to Affiliate Franchisees and Subfranchisees located within the Development Area, and not through any other distribution channels.
"Master Franchised BHC Restaurants" means Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants opened and operated by Affiliate Franchisee or Subfranchisee respectively pursuant the Master Franchisee's Development Rights and Operating Rights.
You will be granted the right to use the "BHC CHICKEN" mark and "BHC" name, as well as such other trademarks, service marks, tradenames logos, designs and identifying slogans, whether registered or not registered, that we specifically designate, in the MFA or otherwise in writing, for use by Master Franchisee from time to time (collectively, the "Trademarks").
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, a Master Franchisee is granted the right to grant subfranchises for Bhc restaurants within a specific Development Area. This right, termed "Development Rights," allows the Master Franchisee to enter into Subfranchise Agreements with third parties who meet Bhc's requirements, thus establishing Subfranchised Bhc Restaurants within the designated area. The Master Franchisee also has "Operating Rights" to directly own and operate Bhc Restaurants through an affiliate within the Development Area. These restaurants are referred to as "Affiliate Franchised BHC Restaurants".
The Master Franchisee's ability to grant subfranchises is tied to maintaining the Development Rights by meeting specific development schedules. The Master Franchisee must establish and operate a cumulative number of Master Franchised Bhc Restaurants (both Affiliate Franchised and Subfranchised) within the Development Area by certain dates, as outlined in the development schedule. Furthermore, before granting any subfranchises to third parties, the Master Franchisee must first establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area under a separate Franchise Agreement with Bhc.
The Master Franchisee is responsible for the subfranchise approval process, ensuring potential subfranchisees and restaurant locations meet Bhc's minimum requirements. Bhc retains the right to approve or disapprove any potential subfranchisee or restaurant. The Master Franchisee must also create a Subfranchise Agreement and other related agreements, which require Bhc's prior written approval and must align with the terms of the Master Franchise Agreement. Additionally, the Master Franchisee is responsible for preparing and updating a Subfranchise FDD in compliance with all applicable franchise laws for offering and selling subfranchises within their Development Area.