Can Bhc terminate the Multi-Unit Master Franchise Agreement without cause?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi-Unit Master Franchise Agreement | Summary |
|---|---|---|
| e. Termination by franchisor without cause | 13.1 | We can terminate the MFA if you are in breach of that agreement (This provision is subject to state law.) |
| f. Termination by franchisor with cause | 13.2 | We can terminate the MFA if you are in material breach of that agreement (This provision is subject to state law.) |
| g. "Cause" defined – curable defaults | 13.1 | You have 30 days after notice to cure monetary defaults and other defaults (including defaults under a lease for your Master Franchise BHC Restaurants) that can be cured. (This provision is subject to state law.) |
| h. "Cause" defined – non-curable defaults | 13.2 | Non-curable defaults: your bankruptcy or insolvency; your abandonment of the franchised business; you make material misrepresentations relating to your acquisition of the Franchise or you engage in conduct that reflects materially and unfavorably upon the operation and reputation of the Master Franchised Business or the BHC System; you and us agree in writing to terminate the Franchise; you fail, for a period of 10 days after notification of noncompliance, to comply with any federal, state or local law or regulation applicable to the operation of the Franchise; after curing any default, you engage in the same noncompliance whether or not such noncompliance is corrected after notice; you repeatedly fail to comply with one or more material requirements of the MFA, whether or not corrected after notice; the Franchised Business or your Master Franchise BHC Restaurant is seized, taken over, or foreclosed by a government official, creditor, lien holder or lessor, or that a final judgment against you remains unsatisfied for 30 days; you are convicted of a felony or any other criminal misconduct that is relevant to the operation of the Franchise; an audit or investigation conducted by us reveals that you knowingly maintained false books or records; or submitted false reports to us, or knowingly understated your Gross Revenue or withheld the reporting of any of your Gross Revenue (see further information in Section 13.2(a)(x)); we make a reasonable determination that your continued operation |
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, Bhc can terminate the Multi-Unit Master Franchise Agreement (MFA) under certain conditions. The FDD outlines specific circumstances under which Bhc can terminate the MFA with or without cause, subject to state law.
Specifically, Bhc can terminate the MFA if the franchisee is in breach of the agreement. This is listed as termination by the franchisor without cause, but the FDD also states that this provision is subject to state law. Bhc can also terminate the MFA if the franchisee is in material breach of the agreement, which is considered termination with cause, and is also subject to state law.
The FDD defines "cause" for termination, distinguishing between curable and non-curable defaults. Curable defaults, such as monetary defaults or defaults under a lease, allow the franchisee a 30-day period after notice to remedy the situation. Non-curable defaults include events like bankruptcy, abandonment of the franchised business, material misrepresentations, or failure to comply with laws, among other conditions. These provisions are important for prospective franchisees to understand, as they outline the conditions under which their agreement can be terminated and the steps they can take to avoid termination.