What remedies, besides termination, are available to the Bhc Franchisor at law or in equity?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Any default by Franchisee (or any person/company or Affiliated Entity) under the terms and conditions of this Agreement or any lease or sublease, or any other agreement between Franchisor or its affiliate, and Franchisee, shall be deemed to be a material default of each and every said agreement, and furthermore, in the event of termination, for any cause, of this Agreement, or any other agreement between the parties hereto, including, but not limited to, the MFA or MTRA, between the parties hereto, Franchisor may, at its option, terminate any and all said agreements. No right or remedy which Franchisor may have (including termination) is exclusive of any other right or remedy provided under law or equity and Franchisor may pursue any rights and/or remedies available.
(d) If this Agreement is terminated prior to the end of its term due to Franchisee's default hereunder, in addition to any amounts set forth in this Agreement, 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 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 Store has been open less than twelve (12) months, the average monthly royalty fees and advertising fees payable by Franchisee for the period the Franchised BHC Restaurant was open) multiplied by the lesser of thirty-six (36) months or the number of months then remaining in the then-current term of this Agreement. If no Franchised BHC Restaurant has been opened at the time of termination, Franchisor's lost future revenues as a result of 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 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. 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 Franchisee's default is difficult to determine and that this lump sum payment is reasonable in light of the damages Franchisor will incur for 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 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. 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.
Master Franchisee's books and records examined or audited (this remedy will be in addition to any other rights or remedies Franchisor has under this Agreement or otherwise, including Franchisor's right to terminate this Agreement).
(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.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, in addition to termination, Bhc has several other remedies available at law or in equity. Bhc can pursue rights and remedies available, including monetary damages. Specifically, if the franchise agreement is terminated early due to the franchisee's default, Bhc is entitled to a lump sum payment. This payment is calculated as the average monthly royalty fees, advertising fees, and additional fees from the preceding 12 months (or the period the restaurant was open, if less than 12 months) multiplied by either 36 months or the remaining months in the agreement, whichever is less. If no Bhc restaurant has opened, the calculation uses the average fees of similarly situated franchisees within 25 miles of the proposed location.
This lump sum payment serves as damages for the franchisee's breach and Bhc's lost future revenue. While it replaces damages specifically for lost future revenue, it is in addition to all other amounts owed to Bhc, including other costs and expenses. Bhc retains the right to recover other damages and seek injunctive relief to enforce the agreement, protect its trademark rights, and uphold the covenants within the agreement.
Bhc also has the right to inspect the franchisee's books and records, and the franchisee must cooperate with inspections of the restaurant or any facility related to the business. Franchisees are responsible for correcting any deficiencies noted during inspections and must cover all costs associated with re-inspections by Bhc personnel until the issues are resolved. Additionally, a franchisee or master franchisee is restricted from engaging in any competing business selling similar goods or services within a 25-mile radius of the franchisee's territory for two years after the termination, cancellation, or expiration of the franchise agreement.