What payments are the Bhc Master Franchisee obligated to make to the Franchisor upon termination?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ermination Date, Master Franchisee hereby irrevocably appoints Franchisor as Master Franchisee's lawful attorney upon termination of this Agreement with authority to file any document in the name of and on Franchisor's behalf for the purpose of terminating any and all of Master Franchisee's rights in any trade name Master Franchisee have used containing any of the Marks.
- (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
the lesser of thirty-six (36) months or the number of months then remaining in the then-current term of this Agreement. Master Franchisee acknowledges that a precise calculation of the full extent of the damages Franchisor will incur in the event of termination of this Agreement as a result of Master Franchisee's default is difficult to determine and that this lump sum payment is reasonable in light of the damages Franchisor will incur for Master Franchisee's material default causing the premature termination of this Agreement. This lump sum payment shall be in lieu of any damages for Franchisor's lost future revenue that Franchisor may incur as a result of Master Franchisee's default, but it shall be in addition to all amounts owed to Franchisor and other costs and expenses to which Franchisor is entitled under the terms of this Agreement. Master Franchisee's payment of this lump sum shall not affect Franchisor's right to recover damages other than lost future revenue and to obtain appropriate injunctive relief and other remedies to enforce this Section 15, its trademark rights, and the covenants set forth in this Agreement.
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 for breaching the agreement and for Bhc's lost future revenue. This lump sum is calculated based on the average monthly royalty fees, advertising fees, and additional fees payable by the Master Franchisee under Sections 4.3, 4.4, and 10.1 of the agreement. This average is taken over the 12-month period immediately preceding the termination date. If the Bhc restaurant has been open for less than 12 months, the average is calculated for the period the restaurant was open. This average monthly amount is then multiplied by the lesser of 36 months or the number of months remaining in the agreement's current term. 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 the lesser of thirty-six (36) months or the number of months then remaining in the then-current term of this Agreement.
In addition to the lump sum payment, the Master Franchisee is also responsible for paying all royalties, other fees, and any other amounts owed to Bhc or its affiliates under the Master Franchise Agreement or any other agreement between the parties, whether written or oral. This includes obligations such as those arising from subleases and lease assignments.
Furthermore, the Master Franchisee is obligated to cover the expenses Bhc incurs if the Master Franchisee fails to remove signs bearing Bhc's marks or to discontinue advertising implying association with Bhc. Bhc has the right to enter the premises and make these changes at the Master Franchisee's expense if the Master Franchisee does not fulfill these obligations within 15 days of written notice. The initial deposit of USD $20,000 per Bhc Restaurant is refundable within sixty (60) days of the expiration or termination of this Agreement if and only if Master Franchisee is in full compliance with Master Franchisee's obligations in this Agreement, including, without limitation, Master Franchisee's post termination obligations set forth in section 11.2 and 15.1 thereof.