What monetary and other obligations must a Bhc franchisee satisfy at the time of renewal?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
default in the Franchise Agreement. If the MFA or MTRA is terminated prior to its expiration for cause, all Franchise Agreement will be automatically terminated.
5.2 Renewal Terms.
- (a) Upon written notice delivered to Franchisor not less than 120 days before the end of the existing term hereof, Franchisee may renew its rights granted under this Agreement for additional 10-year terms commencing on the expiration date of the previous term, subject to the provisions of sections 5.2(b) through 5.2(g) below.
- (b) At the time of renewal, Franchisee must (i) then be solvent (which means that Franchisee is able to pay its debts as and when promised by Franchisee and that Franchisee has assets that are greater than its debts), (ii) not have Abandoned the Franchised BHC Restaurant, (iii) not be operating the Franchise in a manner that endangers public health or safety or materially harms the BHC brand or reputation, and (iv) not have knowingly submitted false or incomplete reports to Franchisor during the expiring term.
- (c) Notwithstanding section 5.2(a) above, Franchisor is not obligated to renew Franchisee's rights granted under this Agreement for an additional term if one or more of the following applies or occurs:
- (i) Franchisee gives Franchisor written notice of Franchisee's intention not to renew this Agreement at least 120 days before the expiration of the initial term or any successor term;
- (ii) Termination of this Agreement would be permitted pursuant to sections 13.1 or 13.2 hereof;
- (iii) Franchisee and Franchisor agree not to renew the Franchise Agreement;
- (iv) Franchisor withdraws from distributing its products or services through Franchises in the geographic market served by Franchisee.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee seeking to renew their franchise agreement must meet several conditions. At the time of renewal, the franchisee must be solvent, meaning they are able to pay their debts as promised and have assets exceeding their debts. They must not have abandoned the franchised Bhc Restaurant or operated it in a way that endangers public health, safety, or materially harms the Bhc brand or its reputation. Additionally, the franchisee must not have knowingly submitted false or incomplete reports to Bhc during the expiring term.
In terms of monetary obligations, the franchisee must have satisfied all outstanding payments owed to Bhc and its affiliates. Bhc retains the right to examine the franchisee's books and records within 120 days of the renewal date to verify compliance with these financial obligations. Furthermore, the franchisee is required to pay Bhc a Renewal Fee of $40,000 when signing the Renewal Franchise Agreement.
Beyond financial and operational requirements, the franchisee must also make necessary physical modifications to the franchised Bhc Restaurant to ensure it aligns with the current trade dress and system standards. This includes accommodating any new Bhc products and bringing the restaurant, equipment, materials, and supplies into compliance with the standards applicable to new Bhc franchises. These modifications must be completed before or within 90 days after executing the Renewal Franchise Agreement.
Finally, at least 90 days before the end of the current term, the franchisee and Bhc must sign either a Renewal Franchise Agreement (modified to remove provisions for new franchisees) or an addendum extending the current agreement for another 10-year term. The Renewal Franchise Agreement may contain terms substantially different from the original agreement, and it will supersede the original agreement upon execution.