What right does Bhc have regarding inspections of the franchisee's restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) Franchisor has the right to regularly inspect Franchisee's Franchised BHC Restaurant and any other site where Franchisee conducts the Franchised Business.
8.10 Review and Inspection.
- (a) Franchisor has the right to send representatives at reasonable intervals at any time (announced or unannounced) during normal business hours to Franchisee's Franchised BHC Restaurant (or any other facility from which Franchisee sells BHC Products or any other offices relating to Franchisee's operation of the Franchised BHC Restaurant or conduct of the Franchised Business) to review and inspect Franchisee's operations, business methods, service, management and administration at the Franchised BHC Restaurant or relating to the Franchised
If an examination or audit discloses an underpayment or understatement of any amount due Franchisor by 2% or more, or if the examination or audit is made necessary by Franchisee's failure to furnish required information or documents to Franchisor in a timely manner, or it takes Franchisor's auditors an unreasonable amount of time (more than eight hours) to assemble Franchisee's records for audit, Franchisee must reimburse Franchisor for the cost of having Franchisee's books and records examined or audited (this remedy will be in addition to any other rights or remedies Franchisor has under this Agreement or otherwise, including Franchisor's right to terminate this Agreement).
- (c) Franchisee must fully cooperate in permitting Franchisor's representatives to access Franchisee's Franchised BHC Restaurant (or any other facility from which Franchisee sells BHC Products or any other offices relating to Franchisee's conduct of the Franchised Business) during normal business hours to conduct reviews and inspections, and to render such assistance as Franchisor's representatives may reasonably request.
Upon notice from Franchisor or Franchisor's representatives, Franchisee must immediately begin such steps as may be necessary to correct any deficiencies noted during any such inspection.
Franchisor's representatives may re-inspect Franchisee's Franchised BHC Restaurant (or other facility, if applicable) to ensure noted deficiencies have been corrected.
If the deficiencies have not been corrected by the time of the initial re-inspection, Franchisor's representatives may make additional re-inspections thereafter until noted deficiencies have been corrected or deem the Franchisee to be in material breach.
Franchisee shall be responsible for all accommodation, transportation, meals, daily allowances, and other costs and expenses for the Franchisor's personnel in connection with such re-inspections.
Franchisee shall be responsible for such inspection fee of USD $600, all accommodation, transportation, meals, daily allowances, and other costs and expenses for the Franchisor's personnel in connection with such visits on site but up to three times per Franchised BHC Restaurant only.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc has the right to inspect a franchisee's restaurant regularly. Bhc can send representatives at reasonable intervals, during normal business hours, and may announce or not announce these visits. These representatives can review and inspect the franchisee's operations, business methods, service, management, and administration to ensure compliance with the franchise agreement, operations manual, and system standards. This includes inspecting any facility from which the franchisee sells Bhc products or any offices related to the franchisee's business.
Bhc also has the right to examine, copy, and audit the franchisee's books and records related to the restaurant and the operation of the franchised business, providing 10 days prior notice. If an audit reveals any underpayment of fees, the franchisee must pay the deficient amount plus interest, which is calculated daily at an annual percentage rate (APR) of 18%, unless state law limits interest rates to a lower APR. If the underpayment is 2% or more, or if the audit is necessitated by the franchisee's failure to provide required information or if assembling the franchisee's records takes an unreasonable amount of time (more than eight hours), the franchisee must reimburse Bhc for the cost of the audit.
The franchisee must fully cooperate with Bhc’s representatives during reviews and inspections, providing any assistance reasonably requested. Franchisees are required to immediately correct any deficiencies noted during inspections. Bhc’s representatives may conduct re-inspections to ensure corrections have been made. If deficiencies are not corrected by the time of the initial re-inspection, Bhc may conduct additional re-inspections until the issues are resolved or deem the franchisee in material breach of the agreement. The franchisee is responsible for covering all accommodation, transportation, meals, daily allowances, and other costs for Bhc’s personnel related to these re-inspections. Before the restaurant opens, Bhc will visit the site for up to three on-site visits and complete a final "walk through" inspection, issuing a written consent to open. The franchisee is responsible for a $600 inspection fee for these visits.