What is the role of the 'Affiliate Franchisee' in the Bhc master franchise system?
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").
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, an 'Affiliate Franchisee' is an affiliate of the Master Franchisee who directly owns and operates Bhc restaurants within the Development Area. The Master Franchisee is granted the right to operate through an affiliate, known as the Affiliate Franchisee, to establish and run these restaurants. These restaurants are referred to as 'Affiliate Franchised BHC Restaurants'.
The Master Franchisee cannot directly operate any Bhc restaurants; they must do so through an affiliate that enters into a Franchise Agreement with Bhc. This structure allows the Master Franchisee to fulfill their development obligations, which require establishing and operating a certain number of Master Franchised BHC Restaurants, including both Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants, within the Development Area by specific dates. Furthermore, the Master Franchisee must establish and operate at least one Affiliate Franchised BHC Restaurant before they can grant subfranchises to third parties.
'Master Franchised BHC Restaurants' encompass both Affiliate Franchised BHC Restaurants and Subfranchised BHC Restaurants, highlighting that both types contribute to the Master Franchisee's overall development requirements. The Affiliate Franchisee, therefore, plays a crucial role in the Master Franchisee's ability to meet their development schedule and operate within the Bhc franchise system.