What sections of the Bhc Multi-Unit Master Franchise Agreement address the master franchisee's obligations concerning territorial development and sales quotas?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
e systems. Franchisor reserves all rights to market and sell BHC Products at venues other than BHC Restaurants and through other channels of distribution anywhere, including within Master Franchisee's Territory.
3.6 Promotion and Development of Master Franchise Business.
Master Franchisee undertakes to and guarantees to secure, establish and operate, through its Subfranchisees under Subfranchise Agreements, not less than the cumulative number of BHC Restaurants (including Franchised BHC Restaurants) in the Development Area by each of the dates specified in the "Initial Development Schedule" (attached hereto as Exhibit 1).The required BHC Restaurant quotas listed in the Initial Development Schedule are each an "Initial Development Quota" and are collectively referred to as the "Initial Development Quotas." As further described in section 3.1, Master Franchisee must establish and operate at least one (1) Franchised BHC Restaurant within the Development Area pursuant to separate Subfranchise Agreements before Master Franchisee may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area. If Master Franchisee fails to meet any of the Initial Development Quotas by the date specified in the
Initial Development Schedule, Franchisor shall have the right to collect from Master Franchisee an amount up to the then-current MF Development Fee Master Franchisee is required to pay Franchisor pursuant to section 4.1(b) for each BHC Restaurant short of the applicable Initial Development Quota. Master Franchisee shall pay to Franchisor any such amount within seven (7) days of receipt of Franchisor's request for payment.
3.7 Extent of Grant.
(a) Master Franchisee understands and agrees that Master Franchisee is licensed hereby only for the operation of the Franchised Business and only within Master Franchisee's Development Area. Master Franchisee must conduct its Master Franchise Business in Master Franchisee's Territory only BHC Products and other goods and services that Franchisor designates as required or approved for all Master Franchisees. Franchisor has the right to change and add other authorized goods and services, which Master Franchisee will then be required to offer.
Source: Item 9 — Franchisee's Obligations (FDD pages 28–29)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Section 3.6 of the Multi-Unit Master Franchise Agreement, titled "Promotion and Development of Master Franchise Business," outlines the master franchisee's obligations to secure, establish, and operate a minimum cumulative number of Bhc restaurants within the Development Area by specific dates, as detailed in the "Initial Development Schedule" (Exhibit 1). These required restaurant quotas are termed "Initial Development Quotas."
The master franchisee is obligated to establish and operate at least one franchised Bhc restaurant within the Development Area through a separate Subfranchise Agreement before granting subfranchises to third parties. Failure to meet any of the Initial Development Quotas by the specified date in the Initial Development Schedule may result in Bhc having the right to collect from the master franchisee an amount up to the then-current MF Development Fee for each restaurant short of the quota. This payment must be made within seven days of receiving Bhc's request.
Additionally, the document mentions that for determining compliance with the Development Schedule, only Bhc restaurants that are actually open and continuously operating for business on a given date will be counted towards the required number. Bhc may defer a scheduled opening date if it determines that the master franchisee made a diligent effort to open a restaurant but was unable to do so due to reasons beyond their reasonable control.