What rights will a Master Franchisee be granted under the Master Franchise Agreement with Bhc?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
are defined below).
Under the MFA, you will be granted the right and license: (i) to grant subfranchises for the establishment and operation of BHC Restaurants, as defined below, within the Development Area ("Development Rights") to third party subfranchisees that meet our requirements ("Subfranchisees") by entering into Subfranchise Agreements (as defined below) ("Subfranchised BHC Restaurants"); and (ii) to directly own and operate through an affiliate of the Master Franchisee ("Affiliate Franchisee") ("Affiliate Franchised BHC Restaurants") within the Development Area once opened, and to support, and receive fees from, as applicable, all Master Franchised BHC Restaurants within the Development Area once opened ("Operating Rights").
"BHC Restaurant(s)" means a single retail dine-in, carry-out, drive-thru, and delivery restaurant, serving classic Korean flavor fried chicken (e.g., Korean cheese seasoning, Korean soy sauce, sweet & spicy sauce), sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories, using designated concepts, designs, recipes, authorized equipment, and techniques.
"BHC Products" mean any product or service we authorize to be provided at BHC Restaurants under the System, as we may amend from time to time, with the understanding that any such products and services, including pre-packaged or ready-to-drink products and/or related merchandise or services, may only be offered to Affiliate Franchisees and Subfranchisees located within the Development Area, and not through any other distribution channels.
"Master Franchised BHC Restaurants" means Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants opened and operated by Affiliate Franchisee or Subfranchisee respectively pursuant the Master Franchisee's Development Rights and Operating Rights.
You will be granted the right to use the "BHC CHICKEN" mark and "BHC" name, as well as such other trademarks, service marks, tradenames logos, designs and identifying slogans, whether registered or not registered, that we specifically designate, in the MFA or otherwise in writing, for use by Master Franchisee from time to time (collectively, the "Trademarks"). In addition, under the MFA, you will be granted the right to use the System and our "IP Rights" in accordance with our manuals and other requirements for the operation of Master Franchise Businesses.
The "System" is characterized by a distinctive layout, service style, design, signs, décor, furnishings, recipes, procedures, and techniques that is an unique system for the sourcing, distribution, offer and sale of Korea style fried chicken and sandwich, beverage products, other foods, certain complementary products, accessories, and services under the Trademarks, which includes operating and service procedures, management practices, techniques, methods, knowledge, expertise, skill and proprietary information relating to the operation of a food and beverage business, layout and other systems and procedures in relation to the Master Franchise Business and the operation of BHC Restaurants, as well as any amendments, and improvements we or our affiliates make to such System or any of the foregoing from time to time.
You will be required to conduct an approval process, including a background check, to confirm that each potential subfranchisee and each potential BHC Restaurant meet all of our then current minimum requirements for new subfranchisees and new BHC Restaurants, as the same may be amended, replaced or supplemented by us from time to time. We also have the right, upon written notice to you, at our sole discretion, to approve or disapprove any or all potential subfranchisees and potential BHC Restaurants. You may not directly operate any BHC Restaurant under the MFA, but may only do so through an affiliate that enters into a Franchise Agreement with BHC. A "Affiliate Franchised BHC Restaurant" means a BHC Restaurant that is or will be established and operated by an affiliate of the Master Franchisee, and a "Subfranchised BHC Restaurant" means a BHC Restaurant that is or will be established and operated by a Subfranchisee that is a third party and not your affiliate.
In order to maintain your Development Rights under the MFA, you must establish and operate the cumulative number of Master Franchised BHC Restaurants (including Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants) in the Development Area by the dates specified in the applicable development schedule, as further described in Item 12. In addition, you must establish and operate at least one (1) Affiliate Franchised BHC Restaurant within the Development Area pursuant to a separate then-current Franchise Agreement before you may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
You are responsible for preparing and seeking our prior written approval of the form subfranchise agreement ("Subfranchise Agreement") and any other form agreements, including an area development agreement or lease addendum (collectively, "Other Agreements"), you intend to use with your prospective subfranchisees or Subfranchisees. In addition, once we have approved a form Subfranchise Agreement or Other Agreement, you may not modify the terms of such form documents without submitting to and receiving our prior written approval. Your form Subfranchise Agreement and Other Agreements must include terms and conditions consistent with your MFA and as we prescribed from time to time, including the maximum size of the territory granted under any Subfranchise Agreement or Other Agreement.
Source: Item 1 — The Franchisor, And Any Parents, Predecessors, And Affiliates (FDD pages 7–10)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, under the Master Franchise Agreement (MFA), a Master Franchisee is granted specific rights and licenses. These include the right to grant subfranchises for the establishment and operation of Bhc Restaurants within a designated Development Area to third-party subfranchisees who meet Bhc's requirements. This is referred to as "Development Rights." The Master Franchisee can also directly own and operate Bhc Restaurants through an affiliate, known as an "Affiliate Franchisee," within the Development Area. This includes the right to support and receive fees from all Master Franchised Bhc Restaurants within the Development Area, which are termed "Operating Rights." These restaurants serve classic Korean flavor fried chicken, sandwiches, wraps, Korean cuisines and other beverages, food, and related merchandise, products, and accessories, using designated concepts, designs, recipes, authorized equipment, and techniques. The Master Franchisee also has the right to offer BHC Products and services, which are any product or service authorized by Bhc to be provided at Bhc Restaurants under the System.
In addition to development and operating rights, Bhc grants the Master Franchisee the right to use the "BHC CHICKEN" mark and "BHC" name, along with other designated trademarks, service marks, tradenames, logos, designs, and identifying slogans. The Master Franchisee also gains the right to use the System and Bhc's "IP Rights" in accordance with Bhc's manuals and other requirements for operating Master Franchise Businesses. The System encompasses a distinctive layout, service style, design, signs, décor, furnishings, recipes, procedures, and techniques for the sourcing, distribution, offer, and sale of Korea style fried chicken and sandwich, beverage products, other foods, certain complementary products, accessories, and services under the Trademarks.
However, the Master Franchisee must adhere to certain conditions to maintain these rights. They are required to conduct an approval process, including a background check, to ensure that each potential subfranchisee and each potential Bhc Restaurant meet Bhc's minimum requirements. Bhc also retains the right to approve or disapprove any potential subfranchisees and Bhc Restaurants. The Master Franchisee cannot directly operate any Bhc Restaurant under the MFA, but may only do so through an affiliate that enters into a Franchise Agreement with Bhc. To maintain Development Rights, the Master Franchisee must establish and operate the required number of Master Franchised Bhc Restaurants (including Affiliate Franchised Bhc Restaurants and Subfranchised Bhc Restaurants) in the Development Area by the dates specified in the development schedule.
Furthermore, the Master Franchisee must establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area before granting subfranchises to third parties. The Master Franchisee is responsible for preparing and obtaining Bhc's prior written approval of the form subfranchise agreement and any other form agreements they intend to use with prospective subfranchisees. Once approved, these documents cannot be modified without Bhc's prior written approval. The Subfranchise Agreement and Other Agreements must include terms and conditions consistent with the MFA and as prescribed by Bhc, including the maximum size of the territory granted under any Subfranchise Agreement or Other Agreement. The Master Franchisee is also required to prepare and disclose a separate disclosure document to prospective subfranchisees detailing the offer of unit franchises for Bhc Restaurants.