Does Bhc require Affiliate Franchisees and Subfranchisees to comply with the standards for purchasing goods and services?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 8: Restrictions on Sources of Products and Services
You must, and ensure that your Affiliate Franchisee and your Subfranchisees: (i) advertise, sell, and serve all and only the products we authorize; (ii) purchase, and maintain inventory as needed to meet reasonably anticipated consumer demand of the BHC Products; and purchase and sell ancillary products, which may include books, specialty foods, packaged foods, books, hats, t-shirts, and novelty items, as we periodically specify, for sale at a Master Franchised BHC Restaurant ("Ancillary Products"). To ensure highest degree of consistency, service, and quality, you must practice and conform to, and ensure that your Affiliate Franchisee and your Subfranchisees maintain and comply with, the standards, operating procedures, specifications, and rules we have established for the operation of a Master Franchised BHC Restaurant, as modified by us from time to time including specifications as to ingredients, brand names, preparation, and presentation ("Standards"). You and your Affiliate Franchise must purchase, and must ensure that your Subfranchisees only purchase, all products that your Affiliate Franchise and your Subfranchisee offer from a Master Franchised BHC Restaurant, including products which bear any of our trademarks, solely and exclusively from BHC, or our designated supplier.
For purposes of clarification, except as otherwise provided in the MFA or in writing by us, you and your Affiliate Franchisee must purchase all BHC Products from BHC, and your Subfranchisees shall purchase all BHC Products to be used and sold from their Master Franchised BHC Restaurants from BHC or our affiliates. You may not, and must ensure that your Subfranchisees do not, distribute, sell, resell, supply, license, sublicense, lease, rent, loan, market, provide access to, make available or transfer any Supplies to any third party.
Required Purchases of Goods or Services, including Computer and Point of Sale System
In order to ensure a uniform image and uniform quality of products and services throughout the System, you and your Affiliate Franchisee must maintain and comply with and must ensure that your Subfranchisees maintain and comply with our Standards.
From time to time we, an affiliate or a third-party vendor or supplier may be the only approved supplier for certain products.
As of the date of this Disclosure Document, there are designated suppliers who are the only source for equipment, gift cards and merchandising materials, sauce mix, inventory items, signage, Computer System, and uniforms.
Franchisor or its Affiliates Acting as Approved Suppliers
As of the date of this Disclosure Document, we are not the only approved supplier for any goods or services.
Approved Suppliers and Approval of Alternative Suppliers
We provide you with a list of approved manufacturers, suppliers, and distributors ("Approved Suppliers List") and approved inventory products, fixtures, furniture, equipment, signs, stationery, supplies and other items or services necessary to operate the Master Franchised BHC Restaurant ("Approved Supplies List"). The Approved Supplies List may specify a required manufacturer or supplier of a specific product or piece of equipment. We reserve the right to designate a required source of supply for certain products and supplies, and we or an affiliate may be a required source. The lists also may include other specific products without reference to a particular manufacturer or supplier, or they may set forth the specifications and/or standards for other approved products. A copy of the current list of Approved Supplies List is attached as Exhibit H. The Approved Suppliers and Approved Supplies List are not specific to the operation of a Subfranchise. We may revise the Approved Suppliers List and Approved Supplies List. We and the Approved Suppliers may make changes to the prices, delivery terms, and other terms relating to their respective sale of Approved Supplies to you, your Affiliate Franchisee and/or your Subfranchisees on 30 days' notice to you. We and the Approved Suppliers reserve the right to discontinue the sale of any Approved Supplies (or any part thereof) at any time we or the Approved Suppliers determine, in our or their sole judgment, that the continued sale of such item has become unfeasible, unprofitable, or otherwise undesirable. We give you the approved lists as we deem advisable. We generally do not give these lists to approved suppliers. We will provide contact information for your distributors and/or manufacturers of all products offered at the Master Franchised BHC Restaurant.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 25–28)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Affiliate Franchisees and Subfranchisees must adhere to the franchisor's standards for purchasing goods and services. To maintain consistency and quality, Affiliate Franchisees and Subfranchisees must comply with the standards, operating procedures, specifications, and rules established by Bhc for operating a Master Franchised Bhc Restaurant. These standards include specifications for ingredients, brand names, preparation, and presentation. They are required to purchase all products, including those bearing Bhc's trademarks, exclusively from Bhc or its designated suppliers.
Bhc also maintains an Approved Suppliers List, which specifies approved manufacturers, suppliers, and distributors for items necessary to operate the Master Franchised Bhc Restaurant. This list may specify required manufacturers or suppliers for specific products or equipment, and Bhc reserves the right to designate a required source of supply for certain products and supplies, including Bhc itself or an affiliate. The Approved Suppliers and Approved Supplies List are not specific to the operation of a Subfranchise.
If a franchisee, Affiliate Franchisee, or Subfranchisee proposes to use Alternative Supplies or an Alternative Supplier, they must notify Bhc in writing and submit sufficient information for Bhc to determine whether the item or service complies with System standards or the supplier meets Bhc's criteria. Bhc will provide written approval or disapproval within a reasonable time period, typically 30 days. The approval of alternative suppliers depends on various factors, including product quality, delivery frequency and reliability, service standards, financial capability, customer relations, and the supplier's willingness to compensate Bhc or its affiliates for the right to do business with the System. Bhc may inspect or re-inspect the facilities and products of any approved supplier and revoke its approval if the supplier fails to continue to meet its criteria and specifications.
Bhc can revise the Approved Suppliers List and Approved Supplies List and may make changes to the prices, delivery terms, and other terms relating to the sale of Approved Supplies with 30 days' notice. Bhc and the Approved Suppliers reserve the right to discontinue the sale of any Approved Supplies at any time if they determine that the continued sale of such item has become unfeasible, unprofitable, or otherwise undesirable.