Is Bhc a third-party beneficiary of the non-disclosure agreements used by franchisees?

According to Bhc's 2025 Franchise Disclosure Document, Bhc does have the right to be a third-party beneficiary of the non-disclosure agreements that franchisees use with their employees and others who have access to Bhc's confidential information. This means that Bhc has independent enforcement rights regarding these agreements. Bhc may regulate the form of agreement that franchisees use.

This is a significant point for prospective franchisees because it means that Bhc can directly enforce the non-disclosure agreements, even if the franchisee does not. This provides Bhc with an additional layer of protection for its confidential information and trade secrets. Franchisees must use non-disclosure and non-competition agreements with those having access to Bhc's confidential information and take reasonable steps to prevent improper disclosure to others.

In practical terms, if a franchisee's employee or another party violates a non-disclosure agreement, Bhc can take legal action against that individual directly, without necessarily involving the franchisee. This can save the franchisee time and money, and it also ensures that Bhc has the ability to protect its interests effectively. This is a fairly common practice in franchising, as franchisors typically want to maintain tight control over their proprietary information and brand standards.