Who is responsible for reimbursing Bhc for costs associated with testing Alternative Supplies?

According to Bhc's 2025 Franchise Disclosure Document, the franchisee, their Affiliate Franchisee, Subfranchisees, or any supplier proposing an Alternative Supplier or Supplies are responsible for reimbursing Bhc for all costs and expenses associated with testing. These costs include expenses for testing, travel, lodging, and daily allowances incurred when Bhc deems it necessary to visit a supplier's facilities.

This means that if a Bhc franchisee wants to use a product or supplier that is not already approved by Bhc, they will have to cover the costs of Bhc testing and inspecting the proposed alternative. This includes not only the direct costs of testing the product or service itself, but also any travel and lodging expenses Bhc incurs to visit the supplier's facilities. The franchisee is responsible for these costs regardless of whether the alternative supplier or supplies are ultimately approved.

This policy ensures that Bhc maintains control over its supply chain and the quality of products and services offered under its brand name. It also protects Bhc from incurring expenses related to evaluating unapproved suppliers or products without assurance of adoption. For a prospective franchisee, this highlights the importance of using approved suppliers and supplies whenever possible to avoid these potentially significant costs. Franchisees should carefully consider these potential expenses when evaluating whether to propose an alternative supplier or product.

It is also important to note that Bhc has the right to receive payments, rebates, and other forms of consideration from suppliers based upon the franchisee's purchases. These payments are retained and used by Bhc as deemed appropriate or as required by the vendor or manufacturers. This revenue stream for Bhc is separate from the reimbursement for testing Alternative Supplies, but it further emphasizes the importance of approved suppliers in Bhc's business model.