Is a Bhc Master Franchisee relieved of any obligation or liability under the Franchise Agreement by entering into a Subfranchise Agreement?

According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is not relieved of any obligation or liability under the Franchise Agreement by entering into a Subfranchise Agreement. The Master Franchisee is still responsible for all obligations and liabilities arising from the original agreement, even after subfranchising. This means the Master Franchisee remains accountable to Bhc for the overall performance and compliance within their territory.

Furthermore, the Master Franchisee is responsible for ensuring that each Subfranchisee complies with their respective Subfranchise Agreement. The Master Franchisee must notify Bhc promptly in writing of any breaches, no later than 14 days after the occurrence. Any action or omission by a Subfranchisee that violates the terms of the Franchise Agreement or any Subfranchise Agreement will be considered a breach of the Franchise Agreement by the Master Franchisee.

The Master Franchisee is also liable to Bhc for the acts, omissions, defaults, and negligence of each Subfranchisee, as if they were the actions of the Master Franchisee themselves. This extends to the Subfranchisee's personnel as well. The Master Franchisee must also ensure that each Subfranchisee includes provisions in their lease agreements that give the Master Franchisee the right to receive notice of any lease breaches, the right to cure such breaches, and the right to have the lease transferred to them upon a breach or termination of the Subfranchise Agreement.