Is the Master Franchisee for Bhc required to open a Bhc restaurant before granting rights to subfranchisees?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Master Franchisee must open at least one (1) Franchised BHC Restaurant before granting rights to third-party Subfranchisees. "Master Franchisee" as used herein shall refer to and include the Master Franchisee and the Affiliate. If the Franchised BHC Restaurant has not been identified when Master Franchisee signs this Agreement, the exact location of the Franchised BHC Restaurant will be inserted into a restated Exhibit 1 attached to this Agreement as soon as its location has been determined.
7.2 Building Out Master Franchised BHC Restaurant.
(a) Premises acceptable to Franchisor where Master Franchised BHC Restaurant will be operated must be located and secured by Master Franchisee and reviewed and consented to by Franchisor within four (4) months after the Effective Date. Upon signing this Franchise Agreement, Master
Franchisee must promptly locate one or more proposed sites which meet Franchisor's current standards and specifications. For each proposed site, Master Franchisee will submit to Franchisor certain information regarding the site that Franchisor requests. Upon receiving the information regarding a proposed site, Franchisor will review the information and either accept or reject the proposed site. For any site that Franchisor reviews, Master Franchisee must reimburse Franchisor for all costs and expenses that Franchisor incurs in reviewing the site. If Franchisor does not approve the proposed site within 30 days after Master Franchisee's complete submission of the requested information (or 15 days after Master Franchisee provides any supplemental information Franchisor requests), the site will be deemed rejected. If Franchisor disapproves, Master Franchisee must promptly propose an alternative location. Franchisor does not locate sites for Master Franchisee. However, Franchisor may, without, obligation, assist Master Franchisee in locating or evaluating a site for a reasonable fee. If Master Franchisee has not located a site for the Franchised BHC Restaurant that is acceptable to Franchisor within four (4) months after the Effective Date, Franchisor may cancel this Agreement on the basis of Master Franchisee's failing to find an acceptable site.
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 required to open at least one Franchised Bhc Restaurant before they can grant subfranchise rights to third parties. This restaurant must be established and operated within the Development Area under a separate Subfranchise Agreement. The term 'Master Franchisee' includes both the Master Franchisee and any affiliates. If the location of this initial Franchised Bhc Restaurant is not determined when the Master Franchise Agreement is signed, its location will be added to the agreement as soon as it is known.
Bhc requires the Master Franchisee to locate and secure premises acceptable to Bhc for the initial restaurant within four months of the agreement's effective date. The Master Franchisee must submit site information to Bhc for approval and reimburse Bhc for any costs incurred during the review process. If Bhc does not approve a proposed site within a specified timeframe, the site is considered rejected, and the Master Franchisee must propose an alternative location. Bhc may assist in site selection for a reasonable fee, but is not obligated to do so.
If the Master Franchisee fails to secure an acceptable site within four months, Bhc reserves the right to cancel the Master Franchise Agreement. This requirement ensures that the Master Franchisee demonstrates their ability to establish and operate a Bhc restaurant before being authorized to grant subfranchises, maintaining brand standards and operational expertise within the Development Area.