Does the Bhc Master Franchisee have the right to directly own and operate restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
In order to maintain your Development Rights under the MFA, you must establish and operate the cumulative number of Master Franchised BHC Restaurants (including Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants) in the Development Area by the dates specified in the applicable development schedule, as further described in Item 12. In addition, you must establish and operate at least one (1) Affiliate Franchised BHC Restaurant within the Development Area pursuant to a separate then-current Franchise Agreement before you may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
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, the Master Franchisee does not directly operate any Bhc Restaurant under the Master Franchise Agreement (MFA). However, the Master Franchisee can operate through an affiliate that enters into a separate Franchise Agreement with Bhc. This affiliate is referred to as an "Affiliate Franchised Bhc Restaurant."
To maintain Development Rights under the MFA, the Master Franchisee must establish and operate a certain number of Master Franchised Bhc Restaurants, including both Affiliate Franchised Bhc Restaurants and Subfranchised Bhc Restaurants, within the Development Area by specific dates outlined in the development schedule. Before granting 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.
In summary, while the Master Franchisee cannot directly own and operate a Bhc restaurant under the MFA, they can do so through an affiliate that has a separate franchise agreement with Bhc. This is a common practice in master franchising, where the master franchisee's primary role is to develop the brand within a territory, often through subfranchising, but they may also operate some locations directly through affiliated entities.