What are Subfranchised Bhc Restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
g 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.
This disclosure document describes the Master Franchise Business. As further described below and in section 3.2(d)(vi) of the MFA, you are required to prepare and disclose to your prospective subfranchisees, including your affiliates, a separate disclosure document that details your offer of unit franchises for BHC Restaurants.
A form the current Master Franchise Agreement is attached as Exhibit A.
(iv) General Market for BHC Products and Services.
The general market in which you will operate the business involves the operation of a master franchise business, which will be to operate a master franchise business offering and selling franchise through an affiliate and subfranchises of dine-in, carry-out and delivery fried chicken and sandwiches and other full service and quick serve restaurants that serve fried chicken and/or sandwiches. The BHC Restaurant will offer BHC Products and services to the general public throughout the year and compete with other fried chicken chains (local, regional, and national), restaurants, grocery Restaurants, and food service businesses. The market for BHC Products is all individuals within a reasonable proximity to the BHC Restaurant. This type of business is fully developed, does not involve sale primarily to a certain group and is not seasonal.
(v) Industry Specific Laws or Regulations
We know of no trade or license regulations which specifically affect the fried chicken and sandwiches industry. Laws exist in every state that govern the food-service industry (including health, sanitation, and safety regulations regarding food storage, preparation, and safety).
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, a Subfranchised Bhc Restaurant is a Bhc Restaurant that is established and operated by a Subfranchisee who is a third party, not an affiliate of the Master Franchisee. The Master Franchisee has the right to grant subfranchises to third-party subfranchisees who meet Bhc's requirements, allowing them to operate Bhc Restaurants within a specific Development Area.
For a Master Franchisee to maintain their Development Rights, they must establish and operate a certain number of Master Franchised Bhc Restaurants, including both Affiliate Franchised Bhc Restaurants and Subfranchised Bhc Restaurants, by specific dates outlined in the development schedule. Before granting subfranchises to third parties, the Master Franchisee must first establish and operate at least one Affiliate Franchised Bhc Restaurant within the Development Area under a separate Franchise Agreement.
The Master Franchisee is responsible for creating a subfranchise agreement, referred to as the "Subfranchise Agreement", and any other related agreements, such as area development agreements or lease addendums, for use with prospective subfranchisees. These agreements require Bhc's prior written approval and must align with the terms and conditions of the Master Franchise Agreement, including the maximum territory size granted to the subfranchisee.
The Master Franchisee, their Affiliated Franchisee, and their Subfranchisees must comply with all applicable federal and state laws related to franchising and subfranchising, including franchise disclosure requirements. The Master Franchisee is responsible for preparing, updating, and registering a Subfranchise FDD to offer and sell subfranchises, ensuring compliance with all waiting periods and providing necessary information to prospective subfranchisees.