Does Bhc require a Master Franchisee to establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area before granting subfranchises?

According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is required to establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area before they are allowed to grant subfranchises to third parties. This initial restaurant must be operated through an affiliate and under a separate Franchise Agreement.

This requirement means that a new Master Franchisee must be prepared to invest in and manage the operations of a Bhc restaurant directly before expanding through subfranchising. This ensures the Master Franchisee has practical experience with the Bhc business model and can effectively support subfranchisees.

The FDD includes an estimated initial investment table for the Master Franchise business and a separate table detailing the estimated initial investment for the Affiliate Franchised Bhc Restaurant. The initial investment for the Affiliate Franchisee to establish and begin operating the first Affiliate Franchised BHC Restaurant is a cost that the Master Franchisee will need to consider. The document specifies that the fees and costs associated with the Affiliate Franchised BHC Restaurant are not directly payable to Bhc, except for training fees and expenses. Some fees are payable to the Master Franchisee or their affiliates, while the rest are paid to third-party suppliers or government agencies.

Prospective Master Franchisees should carefully review both investment tables in Item 7 to understand the full financial commitment required to fulfill this initial operating obligation before being able to subfranchise. Understanding these costs is crucial for planning and securing adequate funding for the Bhc franchise venture.