Does Bhc have an obligation to purchase the Master Franchisee's inventory after termination of the Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Within 30 days after termination, expiration or non-renewal of this Agreement, Franchisor will have the option, but not the obligation, to purchase all or any portion of Master Franchisee's reusable inventory, apparel containing the Marks, proprietary equipment, parts, supplies, fixtures, and furnishings owned and used by Master Franchisee in Master Franchisee's franchised operation.
Franchisor will be permitted to deduct and withdraw from the purchase price to be paid to Master Franchisee all sums then due and owing to Franchisor.
The purchase price for Master Franchisee's reusable inventory and apparel containing the Marks will be at Master Franchisee's cost for said items.
The purchase price for the proprietary equipment, parts, fixtures, and furnishings will be the fair market value thereof.
In determining the fair market value of such items Master Franchisee and Franchisor agree to exclude any factor or increment for goodwill or going concern value.
The purchase price to be paid to Master Franchisee will be paid in cash at the closing of any purchase which will occur no less than 30 days from the date Franchisor exercise Franchisor's option unless Master Franchisee and Franchisor are unable to agree on the fair market value of the assets to be purchased.
If Master Franchisee and Franchisor are unable to reach agreement within a reasonable time as to the fair market value of the items Franchisor has agreed to purchase, Master Franchisee and Franchisor will jointly designate an
independent appraiser, and the appraiser's determination will be binding. Master Franchisee and Franchisor must each pay 50% of the fee charged by the independent appraiser.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc does not have an obligation to purchase the Master Franchisee's inventory after termination, expiration, or non-renewal of the Master Franchise Agreement. Within 30 days after such termination, Bhc has the option, but not the obligation, to purchase all or a portion of the Master Franchisee's reusable inventory, apparel containing Bhc's marks, proprietary equipment, parts, supplies, fixtures, and furnishings owned and used by the Master Franchisee in their franchised operation.
If Bhc chooses to exercise its option to purchase the Master Franchisee's assets, the purchase price for reusable inventory and apparel with Bhc's marks will be based on the Master Franchisee's cost for those items. The purchase price for proprietary equipment, parts, fixtures, and furnishings will be the fair market value, excluding any consideration for goodwill or going concern value. Bhc is permitted to deduct any outstanding amounts owed to them from the purchase price.
The purchase will occur no less than 30 days from the date Bhc exercises its option, with payment made in cash, unless the parties cannot agree on the fair market value of the assets. In case of disagreement on fair market value, Bhc and the Master Franchisee will jointly designate an independent appraiser whose determination will be binding. The cost of the appraiser will be split equally between Bhc and the Master Franchisee.