How is the ongoing Royalty fee calculated for a Bhc Master Franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
4.3 Royalty.
- (a) Beginning on the Opening Date and during the Master Franchise Term, Master Franchisee must pay Franchisor a "Royalty" of 4.5% of Master Franchisee's Gross Revenues from Master Franchised BHC Restaurant ("Franchise Royalty").
- (b) Beginning on the Opening Date and during the Master Franchise Term, Master Franchisee must cause Subfranchisees to pay Franchisor a "Royalty" of 4.5% of Gross Revenues from Subfranchised BHC Restaurants. ("Subfranchise Royalty").
- (c) Franchise Royalty and Subfranchise Royalty are collectively referred to as "Royalties". Royalties are due and payable on a monthly basis on the following 5th day for the previous month (unless that day is a banking holiday, in which case the Royalties are due and payable on the next business day). Royalties will be calculated on the Gross Revenues received during the prior month. Monthly payments of Royalties are to be accompanied by a revenue report in the form prescribed by Franchisor.
- (d) Monthly payments of Royalties are to be accompanied by a revenue report in the form prescribed by Franchisor. Notwithstanding the preceding sentence, Franchisor reserves the right, upon ninety (90) days' written notice to Master Franchisee, to require Master Franchisee to pay the Royalty Fee on a more frequent basis, including monthly or weekly. In addition, upon ninety (90) days' written notice to Master Franchisee, Franchisor reserves the right to require Master Franchisee to sign electronic transfer of funds authorizations and other documents as Franchisor periodically designates or approves, to authorize Master Franchisee's bank to transfer, either electronically or through some other method of payment Franchisor or its Affiliates designate or approve, directly to Franchisor's or its Affiliates' account and to charge Master Franchisee's account all amounts due to Franchisor or its Affiliates from Master Franchisee. Master Franchisee's authorization will permit Franchisor or its Affiliates to designate the amount to be transferred from Master Franchisee's account. Master Franchisee must maintain a balance in its account sufficient to allow Franchisor and/or its Affiliates to collect the amounts owed when due. Master Franchise is responsible for any penalties, fines or other similar expenses associated with the transfer of funds described in this paragraph.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Master Franchisees are required to pay two different types of royalties. First, the Master Franchisee must pay a "Franchise Royalty" of 4.5% of their Gross Revenues from their Master Franchised Bhc Restaurant. Second, the Master Franchisee must ensure that their Subfranchisees also pay a "Subfranchise Royalty" of 4.5% of Gross Revenues from their Subfranchised Bhc Restaurants. These royalties are collectively referred to as "Royalties."
These Royalties are due monthly, specifically on the 5th day of the following month, unless that day falls on a banking holiday, in which case the Royalties are due on the next business day. The calculation is based on the Gross Revenues received during the prior month. Master Franchisees are also required to submit a revenue report in a format prescribed by Bhc along with their monthly royalty payments.
Bhc retains the right to modify the frequency of royalty payments. Upon providing ninety (90) days' written notice, Bhc can require Master Franchisees to pay the Royalty Fee more frequently, such as monthly or even weekly. Additionally, Bhc can mandate that Master Franchisees authorize electronic fund transfers for royalty payments. Master Franchisees are responsible for maintaining sufficient funds in their account to cover these payments and are liable for any associated penalties or fees.