What are the required characteristics of an Affiliated Entity to which a Bhc franchisee can assign their agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.6 Transfers from Franchisee to an Affiliated Entity.
- (a) Upon not less than 30 days' prior written notice to Franchisor, Franchisee may, upon Franchisor's written consent, assign and transfer this Agreement at its entirety to an entity that is (i) organized to operate as a developer of Franchised BHC Restaurants and (ii) entirely owned by Franchisee ("Affiliated Entity").
- (b) Any assignment and transfer by Franchisee of the rights, duties and obligations under this Agreement to an Affiliated Entity must be evidenced by a written instrument, in form reasonably satisfactory to Franchisor, under the terms of which said business entity expressly assumes all of Franchisee's rights, duties, and obligations hereunder, whether accrued at the time of such assignment or arising thereafter, and the assignee agrees to be bound by all the terms and provisions of this Agreement to the same extent and in the same manner as Franchisee is. A copy of said instrument, executed by both Franchisee and said business entity must be delivered to Franchisor before the effective date of the transfer. Franchisee will not be able to maintain direct ownership and operation of the Franchised BHC Restaurants which Franchisee (or its Affiliated Entities) has developed after such assignment.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee can assign their agreement to an Affiliated Entity under specific conditions. The Affiliated Entity must be organized to operate as a developer of Franchised Bhc Restaurants. Additionally, the Affiliated Entity must be entirely owned by the franchisee. This means the franchisee maintains complete ownership of the entity taking over the agreement.
To complete the transfer, the franchisee must provide Bhc with at least 30 days' prior written notice and obtain written consent from Bhc. The assignment must be documented in a written instrument, satisfactory to Bhc, where the Affiliated Entity expressly assumes all of the franchisee's rights, duties, and obligations under the Franchise Agreement. This includes all responsibilities, whether they existed at the time of assignment or arise afterward. The Affiliated Entity must agree to be bound by all terms and provisions of the Franchise Agreement, just as the original franchisee was.
A copy of the executed assignment instrument, signed by both the franchisee and the Affiliated Entity, must be delivered to Bhc before the transfer becomes effective. After the assignment, the original franchisee cannot maintain direct ownership and operation of the Bhc Restaurants that the franchisee (or its Affiliated Entities) developed. This ensures that the Affiliated Entity takes full responsibility for the development and operation of the restaurants.