What payments are due to the Franchisor upon termination of the Bhc Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) If this Agreement is terminated prior to the end of its term due to Master Franchisee's default hereunder, in addition to any amounts set forth in this Agreement, Master Franchisee shall promptly pay to Franchisor a lump sum payment (as damages and not as a penalty) for breaching this Agreement and for Franchisor's lost future revenue as a result of such breach in an amount equal to the average monthly royalty fees, advertising fees, and additional fees payable by Master Franchisee under Sections 4.3, 4.4 and 10.1 over the twelve (12) month period immediately preceding the date of termination (or, if the Restaurant has been open less than twelve (12) months, the average monthly royalty fees and advertising fees payable by Master Franchisee for the period the BHC Restaurant was open) multiplied by the lesser of thirty-six (36) months or the number of months then remaining in the thencurrent term of this Agreement.
If no BHC Restaurant has been opened at the time of termination, Franchisor's lost future revenues as a result of Master Franchisee's breach shall be an amount equal to the average monthly royalty fees, advertising fees, and additional fees payable by other similarly situated franchisees within twenty-five (25) miles of any of Master Franchisee's proposed locations multiplied by
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if the Master Franchise Agreement is terminated early due to the Master Franchisee's default, the Master Franchisee must pay Bhc a lump sum. This payment is considered damages for breaching the agreement and compensating Bhc for lost future revenue. The amount is calculated using the average monthly royalty fees, advertising fees, and additional fees payable under Sections 4.3, 4.4, and 10.1 of the agreement. This average is taken over the 12 months before termination. If the restaurant has been open for less than 12 months, the average is calculated for the period it was open.
The lump sum is determined by multiplying this average monthly fee by the lesser of 36 months or the number of months remaining in the agreement's current term. If no Bhc restaurant has opened at the time of termination, the lost future revenues will be calculated based on the average monthly royalty, advertising, and additional fees paid by similarly situated franchisees within 25 miles of the Master Franchisee's proposed locations, multiplied by the lesser of 36 months or the remaining months in the agreement's term.
Bhc clarifies that this lump sum payment is in place of damages for lost future revenue but is in addition to all other amounts owed to Bhc, including other costs and expenses outlined in the agreement. The payment does not affect Bhc's right to recover other damages or seek injunctive relief to enforce Section 15, trademark rights, and the covenants in the agreement.