What are the prohibited actions for the Master Franchisee and Principal Equity Operator regarding competing businesses after the termination of the Bhc Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) For a period of two years after the date ("Termination Date") this Agreement is terminated, is canceled, or expires without renewal pursuant to section 5.2 of this Agreement, Master Franchisee agrees that neither Master Franchisee nor any Principal Equity Operator will (either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any person, persons, partnership, corporation or other entity) operate, manage, own, assist or hold an interest in (direct or indirect as an employee, officer, director, shareowner, partner or otherwise), or engage in, any competing business selling goods or offering services equivalent to BHC Products or the Franchised Business, within a radius of 25 miles of Master Franchisee's Territory or any other authorized retail location selling BHC Products, without Franchisor's express prior written consent, which consent may be withheld in Franchisor's sole and absolute discretion. Following termination or expiration of this Agreement, Master Franchisee must always refrain from any use, direct or indirect, of any Proprietary Information or Trade Secrets.
- (b) If any valid, applicable law or regulation of a competent governmental authority having jurisdiction over this Agreement or the parties hereto limits Franchisor's rights under section 11.2(a) above, then the section will be deemed amended (or deleted) to conform to the requirements of such laws and regulations, but in such event (unless deleted) the provisions of the Agreement thus affected will be amended only to the extent necessary to bring it within the requirements of the law or regulation.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, for two years after the termination, cancellation, or expiration of the Master Franchise Agreement, the Master Franchisee and any Principal Equity Operator are prohibited from engaging in any competing business that sells goods or offers services equivalent to Bhc Products or the Franchised Business. This restriction applies within a 25-mile radius of the Master Franchisee's Territory or any other authorized retail location selling Bhc Products. This is without the express prior written consent from Bhc, which may be withheld at Bhc's discretion.
Additionally, after the termination or expiration of the Agreement, the Master Franchisee must refrain from any direct or indirect use of Proprietary Information or Trade Secrets. This prevents the franchisee from leveraging Bhc's confidential business practices and knowledge in a competing venture.
However, if any valid law or regulation limits Bhc's rights under this non-competition clause, the clause will be amended or deleted to conform to those legal requirements. The amendment will only occur to the extent necessary to comply with the law or regulation. This ensures that the non-compete agreement is enforceable and compliant with applicable laws.
These post-termination non-competition covenants are typical in franchise agreements to protect the brand and its proprietary information. Prospective franchisees should carefully consider the implications of these restrictions, especially if they plan to remain in the same geographic area after the franchise agreement ends.