What rights does Bhc grant to the franchisee within the Development Area under the MFA?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
or competitive brands that we control. All territories granted by us are subject to exceptions and reservations.
As further described in Item 1, under the MFA, we grant to you within the Development Area both Development Rights (the right to grant subfranchises to Subfranchisees for the establishment and operation of Master Franchised BHC Restaurants) and Operating Rights (the right to own and operate (through Affiliate Franchisee) Master Franchised BHC Restaurants once opened, and to support, and receive fees from, as applicable, all existing Master Franchised BHC Restaurants within the Development once opened). You may not directly operate Master Franchised BHC Restaurants under the MFA, but may only do so through an affiliate that enters into a then-current Franchise Agreement with us. In addition, you must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before you may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
If you enter into an MFA with us, we will not establish or franchise anyone else to establish any BHC Restaurant in the Development Area up to the earlier of: (i) the expiration or termination of the MFA. The Development Area generally consists of a city or a portion of a city. Captive locations will be excluded from your Designated Area, and we have the right to develop or franchise the following captive locations: (1) military bases; (2) public transportation facilities; (3) sports facilities, including race tracks; (4) student unions or other similar buildings on college or university campuses; (5) amusement and theme parks; (6) malls; (7) special events; (8) hospitals; (9) hotel, resort, or other lodging facility; (10) state or national parks; (11) exhibition hall; conference facility or convention center; (12) casino or gambling establishment; (13) esports events and venues; (14) street fairs; (15) delivery facilities (e.g.,, ghost kitchens) or (16) any similar area to the sites referenced herein (individually and collectively, "Captive Location(s)).We may not alter the Development Area without your written agreement. However, we may
terminate the MFA if you (i) fail to meet the Development Schedule; (ii) fail to comply with any other terms and conditions of the MFA; (iii) make or attempt to make a transfer or assignment in violation of the MFA; or (iv) fail to comply with the terms and conditions of any individual MFA or of any other agreement to which you and we or our affiliates are parties.
We do not currently, nor do we have any plans in the future to operate or franchise businesses under a different trademark that will sell goods or services like those you will offer. However, we reserve the right to develop other systems involving similar or dissimilar services or goods, under dissimilar service marks, trademarks and trade names belonging to us, without necessarily granting you any rights in those systems. We reserve all rights to market and sell BHC Products and Ancillary Products under our Proprietary Trademarks or different trademarks at venues other than Master Franchise BHC Restaurants and through other channels of distribution (including the Internet), within your Territory and anywhere else. We are not required to pay you compensation for soliciting or accepting orders in your Territory at venues other than Master Franchise BHC Restaurants or through other channels of distribution.
Although we have no current plans to do so, we and our affiliated companies reserve the right to offer and sell other types of franchises that are not directly competitive with the Master Franchised BHC Restaurant
The continuation of your franchise rights to the Development Area does not depend on your attaining a minimum level of sales, revenues or market penetration or another contingency.
Source: Item 12 — Territory (FDD pages 38–39)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, under the Master Franchise Agreement (MFA), Bhc grants the franchisee both Development Rights and Operating Rights within a specific Development Area. Development Rights allow the franchisee to grant subfranchises to Subfranchisees for establishing and operating Master Franchised Bhc Restaurants. Operating Rights enable the franchisee to own and operate Master Franchised Bhc Restaurants through an affiliate, as well as to support existing Master Franchised Bhc Restaurants within the Development Area and receive fees from them.
However, the franchisee cannot directly operate Master Franchised Bhc Restaurants under the MFA; they must do so through an affiliate that enters into a separate Franchise Agreement with Bhc. Furthermore, the franchisee must first establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area through a Subfranchise Agreement before they can grant subfranchises to third parties.
Bhc will not establish or franchise anyone else to establish a Bhc Restaurant in the Development Area up to the earlier of the expiration or termination of the MFA. The Development Area generally consists of a city or a portion of a city. However, Bhc retains the right to develop or franchise specific captive locations, such as military bases, public transportation facilities, sports facilities, college campuses, amusement parks, malls, hospitals, hotels, state and national parks, convention centers, casinos, esports venues, street fairs, and delivery facilities. Bhc may terminate the MFA if the franchisee fails to meet the Development Schedule, comply with the terms of the MFA, attempt unauthorized transfers, or fail to comply with other agreements with Bhc or its affiliates.
The continuation of the franchisee's exclusive rights to develop Master Franchised Bhc Restaurants depends on meeting the development schedule outlined in the MFA. The Development Area cannot be altered unless both Bhc and the franchisee mutually agree. The franchisee retains rights to the Territory and Development Area even if the population increases. Bhc also reserves the right to market and sell Bhc Products and Ancillary Products under their Proprietary Trademarks or different trademarks at venues other than Master Franchise Bhc Restaurants and through other channels of distribution (including the Internet), within the Territory and anywhere else, without compensating the franchisee.