Is the MF Development Fee refundable if the franchisee fails to open a Bhc Restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
is Item.
Item 5: Initial Fees
You will pay us a non-refundable development/license fee ("MF Development Fee"). The MF Development Fee will vary depending on the development area, the number of BHC Restaurants, and other special circumstances. However, the MF Development Fee for each Restaurant to be opened under the MFA shall not exceed $40,000 for each BHC Restaurant ("Initial Franchise Fee"). Upon signing the MFA, you pay a lump sum, non-refundable MF Development Fee for the total number of BHC Restaurants to be opened under the MFA. The MF Development Fee is non-refundable under any circumstances, even if you fail to open a BHC Restaurant.
In addition, the Initial Deposit for a Master Franchise Business is $20,000 for each BHC Restaurant in your Development Schedule ("Initial Deposit"). The Deposit is due and payable in full when you sign the MFA. The purpose of the Deposit is to secure against non-payment of your obligations under the MFA, and we reserve the right to use the Deposit to compensate ourselves for certain damages and expenses during the term of the MFA, and you must replenish the Deposit to its original amount if we make any deductions. Upon the expiration or termination of the MFA, we will return to you the remaining amount of the Initial Deposit, if any, without interest, after offsetting any sums owed you owe t
Source: Item 5 — Initial Fees (FDD pages 11–12)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the MF Development Fee is non-refundable under any circumstances, even if the franchisee fails to open a Bhc Restaurant. The MF Development Fee will vary depending on factors such as the development area and the number of Bhc Restaurants, but it shall not exceed $40,000 for each restaurant. This fee is paid as a lump sum upon signing the Master Franchise Agreement (MFA).
This non-refundable policy means that a prospective Bhc franchisee risks losing the entire MF Development Fee if they are unable to fulfill their obligations to open the agreed-upon number of restaurants. This could occur due to various factors, such as failing to secure suitable locations, encountering financing difficulties, or failing to meet the franchisor's operational standards. The franchisee should carefully consider these risks and conduct thorough due diligence before entering into the agreement.
In addition to the MF Development Fee, Bhc also requires an Initial Deposit of $20,000 for each restaurant in the Development Schedule. While the MF Development Fee is non-refundable, the Initial Deposit is potentially refundable. The deposit serves as security for the franchisee's obligations under the MFA and may be used by Bhc to cover damages or expenses. Any remaining amount of the Initial Deposit will be returned to the franchisee, without interest, after the expiration or termination of the MFA, provided all outstanding sums owed to Bhc are settled.