What obligation do Bhc Franchisor and Franchisee have to make the relationship succeed?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Franchisor and Franchisee have entered into a long-term franchise relationship which gives rise to an obligation, subject to and consistent with the terms of this Agreement, to endeavor to make the relationship succeed, considering the overall best interests of the entire BHC system, as contemplated by this Agreement.
To that end, Franchisee and Franchisor acknowledge that Franchisee and Franchisor need to attempt to resolve disagreements or disputes before such disagreements or disputes negatively impact the relationship.
Good faith communications between Franchisee and Franchisor are important aspects of that obligation.
The parties hereby pledge and agree that they will first attempt to resolve any dispute, claim or controversy arising out of or relating to this Agreement or any alleged breach hereof, including any claim that this Agreement or any part hereof is invalid, illegal or otherwise voidable or void (collectively, "Dispute") by first having Franchisor's executive officers and Franchisee's Principal Equity Operators meet in person within five business days after a party notifies the other party that a Dispute has arisen at Franchisor's principal executive office (without their respective legal counsel) to conduct a good faith discussion and negotiation of the issues with the express intention of arriving at a settlement ("Settlement Conference").
Franchisor may proceed to terminate this Agreement in either of the following two situations without a settlement meeting or mediation proceeding: (i) if there is any breach of this Agreement by Franchisee that may result in an immediate termination of this Agreement pursuant to section 13.2 above, or (ii) if Franchisee fails to pay any sums due Franchisor under this Agreement which may result in termination of this Agreement pursuant to section 13.3 above.
Also, if a party refuses to participate in the Settlement Conference or mediation within the respective time frames set forth in this section 14.1, the other party may immediately commence an arbitration proceeding pursuant to section 14.2 below.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, both the franchisor and franchisee have an obligation to endeavor to make the relationship succeed, consistent with the terms of the Franchise Agreement. This obligation includes considering the overall best interests of the entire Bhc system. Both parties acknowledge the need to attempt to resolve disagreements or disputes before they negatively impact the relationship, emphasizing the importance of good faith communications.
To resolve disputes, Bhc requires that executive officers from the franchisor and principal equity operators from the franchisee meet in person within five business days after a party notifies the other of a dispute. This meeting, held at the franchisor's principal executive office, aims to facilitate a good faith discussion and negotiation to reach a settlement. However, Bhc may proceed to terminate the agreement without a settlement meeting or mediation if the franchisee breaches the agreement in a way that allows for immediate termination, or if the franchisee fails to pay sums due to Bhc that may result in termination.
If either party refuses to participate in the settlement conference or mediation within the specified time frames, the other party can immediately commence an arbitration proceeding. This structured approach to dispute resolution underscores the commitment of both Bhc and its franchisees to maintain a healthy and productive long-term relationship, while also providing clear pathways for addressing conflicts that may arise.