What is the Bhc royalty fee based on, and when is it recognized?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
the Franchisor, Master Franchisee shall be responsible for replenishing the Deposit such that the Deposit is maintained at USD Twenty Thousand (USD $20,000) per BHC Restaurant within ten (10) business days of each deduction.
4.3 Royalty.
- (a) Beginning on the Opening Date and during the Master Franchise Term, Master Franchisee must pay Franchisor a "Royalty" of 4.5% of Master Franchisee's Gross Revenues from Master Franchised BHC Restaurant ("Franchise Royalty").
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Royalty fee is based on a percentage of Gross Revenues. Specifically, franchisees must pay a royalty of 4.5% of Gross Revenues from the Franchised Bhc Restaurant, beginning on the Opening Date and continuing during the Master Franchise Term.
This means that as soon as a Bhc franchise opens for business, the royalty obligation begins. The royalty is calculated as a percentage of the total revenue the restaurant generates. This ongoing fee is a primary way Bhc generates revenue from its franchisees.
Franchisees should carefully track their Gross Revenues to accurately calculate and remit royalty payments. Understanding what constitutes Gross Revenues, as defined in the FDD, is crucial for compliance and financial planning. The monthly payments of royalties are to be accompanied by a revenue report in the form prescribed by the franchisor.