What are the requirements for the addendum to the lease agreement between the Bhc franchisee and their landlord?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
-(g) Unless otherwise agreed to in writing by Franchisee and Franchisor, Franchisee has the sole responsibility for locating, securing, and obtaining suitable premises for Franchisee's Franchised BHC Restaurant.
Franchisee and Franchisee's landlord will be required by Franchisor to execute an addendum to Franchisee's lease (or other written agreement or written understanding incorporated in, or attached as a rider to, the lease) that (i) grants Franchisor an option to assume Franchisee's position as lessee under the lease for the Franchised BHC Restaurant premises if Franchisee is in material breach of either the lease for the Franchised BHC Restaurant premises (including an obligation of the landlord to notify Franchisor if Franchisee is in such breach) or this Agreement, (ii) grants Franchisor the right to assign the lease to a bona fide franchisee of the System after assuming the lease, and (iii) requires the landlord to fully cooperate with Franchisor in completing de-identification of the Franchised BHC Restaurant if this Agreement is terminated or expires without being renewed and Franchisor does not exercise its option to assume the lease for the Franchised BHC Restaurant premises.
The Addendum to Lease is attached as Exhibit 5.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are generally responsible for securing their own restaurant premises unless otherwise agreed upon with Bhc in writing. As part of this process, Bhc requires that both the franchisee and their landlord execute an addendum to the lease agreement. This addendum serves to protect Bhc's interests in several key ways.
First, the addendum grants Bhc the option to assume the franchisee's position as the lessee if the franchisee materially breaches either the lease agreement or the franchise agreement. This provision also requires the landlord to notify Bhc if the franchisee is in such breach, giving Bhc an opportunity to remedy the situation and protect its brand. Second, the addendum gives Bhc the right to assign the lease to another qualified Bhc franchisee if Bhc assumes the lease. This ensures that the location can continue to operate as a Bhc restaurant. Finally, the addendum mandates that the landlord fully cooperate with Bhc in removing all Bhc branding and trademarks from the premises if the franchise agreement is terminated or expires without renewal, and Bhc chooses not to assume the lease.
The FDD also states that the Addendum to Lease is attached as Exhibit 5, implying that Bhc provides a standard form addendum for this purpose. Furthermore, the landlord acknowledges that they are aware of the franchise agreement and that the tenant would not lease the premises without this addendum. The landlord also acknowledges that the tenant is not an agent or employee of Bhc and has no authority to bind Bhc in any way, unless the lease is assigned to Bhc. All notices to Bhc required by the addendum must be in writing and sent by registered or certified mail, postage prepaid, to the specified address. In the event of a conflict between the terms of the lease and the addendum, the terms of the addendum will govern.
Prospective franchisees should carefully review Exhibit 5 and understand the implications of these requirements before signing a lease. It is also important to ensure that the landlord is willing to agree to the terms of the addendum, as this is a condition of the franchise agreement. Franchisees should also note that Bhc has the right to inspect the premises to ensure compliance with the franchise agreement.