Are Bhc Master Franchisee transfers to heirs after death subject to Bhc's right of first refusal?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
eriod expires, Franchisor will again have such right of first refusal with respect thereto and Master Franchisee will again be required to comply with section 12.3(b) above. Detailed terms of assignment must be delivered to Franchisor no later than 72 hours following the close of escrow or other consummation of the transaction.
12.4 Transfers upon the Death or Incapacity of an Individual Master Franchisee or Majority Equity Owner.
- (a) Notwithstanding the foregoing, in the event of Master Franchisee's death or legal incapacity if Master Franchisee is an individual, or the death or legal incapacity of a Principal Equity Operator of Master Franchisee owning a majority equity interest ("Majority Equity Owner") in Master Franchisee (if an entity), the transfer of Master Franchisee's or the deceased Majority Equity Owner's interest in this Agreement to his or her spouse, parent or adult children, will not be deemed Assignment by Master Franchisee, provided a qualified and trained General Manager remains employed at the BHC Restaurant or another responsible management employee or agent of Master Franchisee satisfactorily trained by Franchisor will be responsible for the Franchised Business.
- (b) In the event of an individual Master Franchisee's death or the death of a Majority Equity Owner, such person's interest in this Agreement or its equity interest in the franchise entity must Transfer as soon as practicable (but not more than 270 days) after the date of death in accordance with such person's will or, if such person dies without a will, in accordance with laws of intestacy governing the distribution of such person's estate, provided that adequate provision is made for the management of the Franchised Business. If Franchisor determines (i) there is no imminent sale to a qualified successor or (ii) there is no heir or other Principal Equity Operator capable of operating the Franchise, Franchisor may
(but is not obligated to) immediately commence operating the BHC Restaurant on Master Franchisee's behalf for a period of up to 90 days, renewable as Franchisor deems necessary for up to one year and Franchisor will periodically discuss the status with the heirs of the decedent. Franchisor can place an interim manager Master Franchised BHC Restaurant, and Master Franchisee must pay Franchisor the manager's salary, transportation, lodging and related living expenses, and our management administration fee of 15%.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a transfer of the Master Franchise Agreement to a Master Franchisee's heirs, personal representatives, or conservators due to death or legal incapacity is not subject to Bhc's right of first refusal. Specifically, this applies to transfers to a spouse, parent, or adult children. However, this is provided that a qualified and trained General Manager remains employed at the BHC Restaurant, or another responsible management employee or agent of the Master Franchisee satisfactorily trained by Bhc will be responsible for the Franchised Business.
In the event of the death of an individual Master Franchisee or a Majority Equity Owner, the interest in the Agreement or equity interest in the franchise entity must be transferred as soon as practicable, but no more than 270 days after the date of death. This transfer must be in accordance with the person's will or the laws of intestacy if there is no will, ensuring adequate management of the Franchised Business.
However, any subsequent transfer by the Master Franchisee's heirs, personal representatives, or conservators will be subject to Bhc's right of first refusal. The Master Franchisee must still comply with certain sections of the agreement, including providing full disclosure of the transfer terms to Bhc no later than three business days before the transaction closes and delivering copies of fully executed paperwork to Bhc no less than three business days after closing.