What section of the Bhc Multi-Unit Master Franchise Agreement discusses non-competition after the agreement terminates or is assigned?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi-Unit Master Franchise Agreement | Summary |
|---|---|---|
| r. Non-competition covenants during the term of the franchise | 5.1 | No involvement in competing business anywhere. |
| s. Non-competition | 11.1 | No competing business for two years within 25 miles of your Master Franchised BHC Restaurant or any other Master Franchised BHC Restaurant or other retail location (this obligation also applies to you if you assign your franchise). The MFA refers to the confidentiality and non-competition covenant in the last MFA you sign. (This provision is subject to state law.) |
| covenants after | ||
| the franchise is | ||
| terminated or | ||
| expires |
Source: Item 17 — Renewal, Termination, Transfer, And Dispute Resolution (FDD pages 43–49)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Section 11.1 of the Multi-Unit Master Franchise Agreement addresses non-competition covenants after the franchise is terminated or expires. This section stipulates that for two years after the termination or expiration of the franchise, the franchisee cannot engage in any competing business within 25 miles of their Master Franchised Bhc Restaurant, any other Master Franchised Bhc Restaurant, or any other Bhc retail location. This obligation also applies if the franchisee assigns their franchise. It is important to note that this provision is subject to state law, meaning the enforceability and specific terms may vary depending on the state. The MFA refers to the confidentiality and non-competition covenant in the last MFA you sign.
This non-competition clause has significant implications for a prospective Bhc franchisee. After leaving the Bhc system, the franchisee's ability to operate a similar business in the same geographic area is restricted for a defined period. This could limit their future business opportunities and potentially impact their income. The 25-mile radius could cover a substantial portion of a metropolitan area, making it difficult to start a competing restaurant nearby.
Franchisees should carefully consider the terms of the non-competition agreement and how it might affect their long-term plans. It is advisable to seek legal counsel to understand the enforceability of the clause in their specific state and to negotiate any modifications if possible. Understanding these restrictions is crucial before signing the Multi-Unit Master Franchise Agreement to avoid potential legal issues and limitations on future business ventures.
It is also important to note that the non-competition covenant in the last MFA you sign will be the one that applies. This means that if you renew or sign a new agreement, the terms of the non-competition covenant could change. Therefore, it is important to carefully review the terms of any new agreement before signing it.