Does the restriction on assignment apply to all assets of the Bhc Restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) Any attempt by Franchisee to assign the Franchise, all (or substantially all) the assets of the Franchised BHC Restaurant, or a controlling interest in Franchisee (if an entity) in violation of this section 12.2 is void and will (i) constitute a material breach of this Agreement, (ii) cause this Agreement (and in Franchisor's sole discretion any or all other agreements between Franchisee and Franchisor, or between Franchisee and Franchisor's affiliates) to be subject to immediate termination without further notice, and (iii) confer no rights or interest whatsoever under this Agreement upon any other party.
- (f) Upon Franchisor's consent to any Assignment by Franchisee, Franchisee must bring all accounts with Franchisor current and transfer to Franchisee's assignee all service agreements or contracts signed by customers of the Franchised Business conducted at Franchisee's Franchised BHC Restaurant. Also, Franchisee must (i) execute an agreement among Franchisee, Franchisor and Franchisee's assignee effecting the Assignment by Franchisee, which will include a mutual release between Franchisee and Franchisor and (ii) enter into an assignment of the lease for the Franchised BHC Restaurant premises (including an assignment to the assignee of Franchisee's rights, title and interest to telephone numbers and utilities respecting the Franchised BHC Restaurant).
12.3 Right of First Refusal.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the assignment restrictions apply to all or substantially all of the assets of the Franchised Bhc Restaurant. Specifically, franchisees must obtain prior written consent from Bhc to assign, transfer, share, or divide their interest in the Franchise Agreement, the assets of the Bhc Restaurant, or a controlling or non-controlling interest in the franchisee entity. This restriction applies whether the transfer is voluntary or involuntary. Without Bhc's consent, any attempt to assign these assets is considered a material breach of the agreement.
Before any assignment, the franchisee must notify Bhc of their intent to sell, transfer, or assign the franchise, including all or substantially all of the restaurant's assets, or a controlling or non-controlling interest in the franchisee. The notification must be in writing and include the proposed transferee's name and address, copies of all agreements related to the sale, assignment, or transfer, and the proposed transferee's application for approval as a successor franchisee. Bhc will then review the application and notify the franchisee of any additional information needed.
If a franchisee attempts to assign the franchise, its assets, or a controlling interest without Bhc's approval, it is considered a breach of the agreement. This can lead to immediate termination of the Franchise Agreement and any other agreements between the franchisee and Bhc, or its affiliates. The unauthorized assignment will not confer any rights or interests to another party. Upon approval of an assignment, the franchisee must ensure all accounts with Bhc are current and transfer all service agreements or contracts signed by customers to the assignee. Additionally, the franchisee must execute an agreement among the franchisee, Bhc, and the assignee, which includes a mutual release between the franchisee and Bhc, and assign the lease for the restaurant premises, including telephone numbers and utilities, to the assignee.
Bhc retains significant control over who can become a franchisee and operate a Bhc restaurant. This control helps Bhc maintain brand consistency and standards across all locations. Prospective franchisees should be aware of these restrictions and the potential consequences of attempting to transfer the franchise without approval. Franchisees should also understand the steps required to obtain Bhc's consent for any proposed assignment, including providing detailed information about the proposed transferee and ensuring all financial obligations are met.