Does the non-competition covenant after termination or assignment of the Bhc Multi-Unit Master Franchise Agreement apply to other retail locations?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi-Unit Master Franchise Agreement | Summary |
|---|---|---|
| r. Non-competition covenants during the term of the franchise | 5.1 | No involvement in competing business anywhere. |
| s. Non-competition | 11.1 | No competing business for two years within 25 miles of your Master Franchised BHC Restaurant or any other Master Franchised BHC Restaurant or other retail location (this obligation also applies to you if you assign your franchise). The MFA refers to the confidentiality and non-competition covenant in the last MFA you sign. (This provision is subject to state law.) |
| covenants after | ||
| the franchise is | ||
| terminated or | ||
| expires |
Source: Item 17 — Renewal, Termination, Transfer, And Dispute Resolution (FDD pages 43–49)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the non-competition covenant following the termination or expiration of the Multi-Unit Master Franchise Agreement (MFA) does extend to other retail locations. Specifically, it restricts involvement in any competing business for two years within a 25-mile radius. This radius is measured from the franchisee's Master Franchised Bhc Restaurant, any other Master Franchised Bhc Restaurant, or any other retail location. This obligation also applies if the franchisee assigns their franchise. Prospective franchisees should be aware that this provision is subject to state law, which may impact its enforceability or specific terms.
This non-compete clause is designed to protect Bhc's market share and brand integrity by preventing former franchisees from leveraging their knowledge of the Bhc system to operate a competing business in close proximity to existing Bhc locations. The inclusion of "other retail locations" in the restricted area suggests that the non-compete extends beyond just other Bhc restaurants, potentially encompassing any retail business that competes with Bhc's offerings.
For a prospective franchisee, this means that upon termination or assignment of the franchise, they will be restricted from engaging in any competing business within the specified radius for two years. This could significantly limit their business opportunities and career options in the immediate future. It is crucial for potential franchisees to fully understand the scope and enforceability of this non-compete agreement, considering the specific state laws that govern it, before entering into the Multi-Unit Master Franchise Agreement with Bhc.
It is also important to note that the MFA refers to the confidentiality and non-competition covenant in the last MFA the franchisee signs, indicating that the terms may evolve over time with subsequent agreements. Therefore, franchisees should carefully review the non-compete provisions in each new MFA to understand their obligations fully.