Are there exceptions to the territory granted to a Bhc franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
from BHC Restaurants that we own, or from other channels of distribution or competitive brands that we control. All territories granted by us are subject to exceptions and reservations.
As further described in Item 1, under the MFA, we grant to you within the Development Area both Development Rights (the right to grant subfranchises to Subfranchisees for the establishment and operation of Master Franchised BHC Restaurants) and Operating Rights (the right to own and operate (through Affiliate Franchisee) Master Franchised BHC Restaurants once opened, and to support, and receive fees from, as applicable, all existing Master Franchised BHC Restaurants within the Development once opened). You may not directly operate Master Franchised BHC Restaurants under the MFA, but may only do so through an affiliate that enters into a then-current Franchise Agreement with us. In addition, you must establish and operate at least one (1) Affiliate Franchised BHC Restaurants within the Development Area pursuant to separate Subfranchise Agreements before you may grant subfranchises to third parties for the establishment and operation of Subfranchised BHC Restaurants within the Development Area.
If you enter into an MFA with us, we will not establish or franchise anyone else to establish any BHC Restaurant in the Development Area up to the earlier of: (i) the expiration or termination of the MFA. The Development Area generally consists of a city or a portion of a city. Captive locations will be excluded from your Designated Area, and we have the right to develop or franchise the following captive locations: (1) military bases; (2) public transportation facilities; (3) sports facilities, including race tracks; (4) student unions or other similar buildings on college or university campuses; (5) amusement and theme parks; (6) malls; (7) special events; (8) hospitals; (9) hotel, resort, or other lodging facility; (10) state or national parks; (11) exhibition hall; conference facility or convention center; (12) casino or gambling establishment; (13) esports events and venues; (14) street fairs;
Source: Item 12 — Territory (FDD pages 38–39)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the territory granted to a franchisee is subject to exceptions and reservations. Bhc grants franchisees the right to operate a Master Franchise Business within a specific Development Area, typically a city or part of a city. However, certain locations termed "Captive Locations" are excluded from the Designated Area, allowing Bhc to develop or franchise these locations themselves. These Captive Locations include military bases, public transportation facilities, sports facilities, college campus buildings, amusement parks, malls, special events, hospitals, hotels, state/national parks, exhibition halls, casinos, esports venues, street fairs, delivery facilities, and similar areas.
Bhc also retains the right to market and sell Bhc Products and Ancillary Products under their trademarks through other venues and channels of distribution, including the Internet, within the franchisee's territory without providing compensation to the franchisee. Furthermore, Bhc reserves the right to develop other systems involving similar or dissimilar services or goods under different trademarks without granting franchisees any rights in those systems.
While the Development Area cannot be altered without mutual agreement, Bhc can terminate the Master Franchise Agreement (MFA) if the franchisee fails to meet the Development Schedule, comply with the MFA terms, attempts unauthorized transfers, or fails to comply with other agreements. These reservations and exceptions could impact a franchisee's potential market and revenue, as Bhc retains the ability to operate in locations and through channels within the franchisee's territory.