What is the Bhc Master Franchisee's obligation regarding Proprietary Information after termination?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
everable from the other provisions of this Agreement, (ii) intended to survive any judgment, and (iii) not to be deemed merged into the judgment.
14.5 Survival.
The terms of this Article 14 survive termination, expiration or cancellation of this Agreement.
15. OBLIGATIONS AND RIGHTS UPON TERMINATION OR EXPIRATION
15.1 Master Franchisee's Obligations.
(a) In the event of termination, cancellation or expiration of this Agreement whether by reason of Master Franchisee's breach, default, non-renewal, lapse of time or other cause, in addition to any other obligations provided for in this Agreement, Master Franchisee must forthwith discontinue the use or display of the Marks in any manner whatsoever, and Master Franchisee may not thereafter operate or do business under the Marks or any other BHC brand or any other name or in any manner that might tend to give the general public the impression that Master Franchisee is in any way associated or affiliated with Franchisor, or any of the businesses conducted by Franchisor or the Owner of the Marks, including without limitation repainting the business premises in a distinctively different color and removing or rearranging distinctive elements of the Trade Dress. Master Franchisee must contact online review sites and other online directories and websites which have made reference to Master Franchised BHC Restaurant during the 18 months prior to the date this Agreement terminates, is cancelled, or expires, and request the removal of all use of the trademarks in connection with the former BHC franchised BHC Restaurant (and the physical address of the former BHC Restaurant) and all use of former reviews from the period Master Franchisee was a BHC Master Franchisee. And, Master Franchisee also must comply with section 15.2 respecting the return to Franchisor of certain materials and must not thereafter use, in any manner, or for any purpose, directly or indirectly, any of the Proprietary Information, Trade Secrets, procedures, techniques, or materials acquired by Master Franchisee by virtue of the relationship established by this Agreement, including, without limitation, (i) any training or other materials, manuals, bulletins, instruction sheets, or supplements thereto, or (ii) any equipment, videotapes, videodiscs, forms, advertising matter, devices, insignias, slogans or designs used from time to time in connection with the Franchised Business.
(b) If there is a termination, cancellation or expiration as described in section 15.1(a) above, Master Franchisee must comply with section 11.2 of this Agreement respecting post-termination competition and also promptly:
(i) remove at Master Franchisee's expense all signs erected or used by Master Franchisee and bearing the Marks, or any word or mark indicating that Master Franchisee is associated or affiliated with Franchisor;
(ii) erase or obliterate from letterheads, stationery, printed matter, advertising, or other forms used by Master Franchisee the Marks and all words indicating that Master Franchisee is associated or affiliated with Franchisor;
(iii) permanently discontinue all advertising stating or implying Master Franchisee is associated or affiliated with Franchisor or the System (if Master Franchisee engages in any business thereafter, Master Franchisee must use trade names, service marks or trademarks that are significantly different from those under which Master Franchisee had done business and must use sign formats that are significantly different in color and type face; and take all necessary steps to ensure that Master Franchisee's present and former employees, agents, officers, shareholders and partners observe the foregoing obligations); and
(iv) assign all interest and right to use all telephone numbers and all telephone and social media listings applicable to the BHC Restaurant in use at the time of such termination to Franchisor and take all actions necessary to change all such telephone numbers immediately and change all such telephone and social media listings as soon as possible.
(v) pay to the Franchisor all Royalties, other fees, and any and all amounts or accounts payable then owed the Franchisor or its affiliates pursuant to this Agreement, or pursuant to any other agreement, whether written or oral, including subleases and lease assignments, between the parties.
(c) If Master Franchisee fails or omits to make or cause to be made any removal or change described in section 15.1(b)(i) – (v) above, then Franchisor will have the right within 15 days after written notice to enter Master Franchised BHC Restaurant or other premises from which the Franchised Business is being conducted without being deemed guilty of trespass or any other tort, and make or cause to be made such removal and changes at Master Franchisee's expense, which expenses Master Franchisee agrees to pay to Franchisor promptly upon demand. Effective on the Termination Date, Master Franchisee hereby irrevocably appoints Franchisor as Master Franchisee's lawful attorney upon termination of this Agreement with authority to file any document in the name of and on Franchisor's behalf for the purpose of terminating any and all of Master Franchisee's rights in any trade name Master Franchisee have used containing any of the Marks.
(d) If this Agreement is terminated prior to the end of its term due to Master Franchisee's default hereunder, in addition to any amounts set forth in this Agreement, Master Franchisee shall promptly pay to Franchisor a lump sum payment (as damages and not as a penalty) for breaching this Agreement and for Franchisor's lost future revenue as a result of such breach in an amount equal to the average monthly royalty fees, advertising fees, and additional fees payable by Master Franchisee under Sections 4.3, 4.4 and 10.1 over the twelve (12) month period immediately preceding the date of termination (or, if the Restaurant has been open less than twelve (12) months, the average monthly royalty fees and advertising fees payable by Master Franchisee for the period the BHC Restaurant was open) multiplied by the lesser of thirty-six (36) months or the number of months then remaining in the thencurrent term of this Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee has specific obligations regarding the use of Proprietary Information after the termination, cancellation, or expiration of the Master Franchise Agreement. The Master Franchisee must not use any of the Proprietary Information, Trade Secrets, procedures, techniques, or materials acquired during the term of the agreement. This includes training materials, manuals, bulletins, instruction sheets, supplements, equipment, videotapes, videodiscs, forms, advertising matter, devices, insignias, slogans, or designs used in connection with the franchised business. This restriction applies regardless of the reason for termination, including breach, default, non-renewal, or lapse of time.
This obligation ensures that the Master Franchisee cannot leverage Bhc's confidential information to compete unfairly or operate a similar business using Bhc's methods and resources. The Master Franchisee acknowledges that this Proprietary Information, including Trade Secrets, is owned solely by Bhc and is being disclosed only for the purpose of operating the franchised business under the agreement. The Master Franchisee gains no ownership interest in this information, only the right to use it during the agreement's term.
The Master Franchisee also agrees not to perform any action that infringes upon Bhc's rights related to the Marks. This restriction extends beyond the agreement's term, ensuring the Master Franchisee does not undermine Bhc's brand or operational methods after the franchise relationship ends. Additionally, for a period of two years after the termination date, the Master Franchisee is restricted from engaging in any competing business selling goods or offering services equivalent to Bhc Products within a 25-mile radius of the Master Franchisee's Territory or any other authorized retail location selling Bhc Products, without Bhc's express prior written consent. This non-compete clause further protects Bhc's interests and Proprietary Information.
In practical terms, this means a former Bhc Master Franchisee must completely cease using any of Bhc's operational methods, marketing materials, and brand elements. They must also take active steps to remove any association with Bhc from online platforms. Furthermore, they are restricted from opening a competing business in the immediate vicinity of existing Bhc locations for a defined period. These obligations are designed to protect Bhc's competitive advantage and prevent former franchisees from capitalizing on the knowledge and resources gained during their time as a franchisee.