Under what circumstances would a Bhc franchisee be required to pay an Indemnification fee?

Question

Accepted Answer

| inspecting new suppliers you propose. |

| Type of Fee                                        | Amount                                                                                                               | Due Date                                                                                                                             | Remarks                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | requested by you. |  |
| Audit | \$10,000 to \$20,000 | On receipt of invoice | You will pay us the costs of an audit to be performed if you fail to provide monthly financial statements, or if a random audit shows an understatement of Gross Revenue in excess of 2%. (6) |
| Late payment | \$100 per occurrence, plus, the lesser of the daily equivalent of 10% per year ("Interest"). | Upon demand | Interest is payable on entire overdue amount beginning with the date payment is due until payment, late charge and interest is paid in full. |
| Failure to Submit Required Report Fee (7) | \$200 per week | Your bank account will be debited for failure to submit any requested report within ten (10) days of request | Payable if you fail to submit any required report or financial statement when due. Fines collected are paid to the Marketing and Promotion Fees contribution, if established, or us. You will continue to incur this fee until you submit the required reports. (7) |
| Dishonored Item Fee | The lesser of \$100 per occurrence, or the highest amount allowed by law | As incurred | Payable if any check or EFT payment is not successful due to insufficient funds, stop payment, or any similar event. |
| Site Review Fee | \$2,000 to \$4,000 | As incurred | You, your Affiliate Franchisee, and your Subfranchisees are solely responsible for selecting the site of your BHC Restaurant, which will be subject to our review and acceptance. We do not locate sites for you. However, we may, without obligation, assist you, your Affiliate Franchisee and your Subfranchisees in locating or evaluating a site for a reasonable fee, including Actual Costs. |
| Indemnification | Will vary under circumstances | As incurred | You reimburse losses we suffer from the operation of your business. (9) |
| Costs and Attorney's Fees | Will vary under circumstances | As incurred | Payable to us, to reimburse us for fees incurred by us in obtaining injunctive or legal relief for the enforcement of any item of the Franchise Agreement or for costs incurred for arbitration proceedings. |
| Type of Fee                                                   | Amount                                                                   | Due Date                         | Remarks                                                                                                                                                                                                                                                                                                                            |
|---------------------------------------------------------------|--------------------------------------------------------------------------|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                               |                                                                          |                                  |                                                                                                                                                                                                                                                                                                                                    |
| Insurance (8)                                                 | Will vary under circumstances                                         | As incurred                      | You must be fully covered in all areas of operating a business. If you do not procure and maintain the required insurance coverage we may, but are not required to, procure insurance coverage on your behalf and to charge the costs to you together with a reasonable fee for the expenses we incur. (8) |
| Management Fee                                                | Reimbursement of our costs, plus a 15% administration charge | As incurred.                     | Payable if we manage the Master Franchised BHC Restaurant because of death or incapacity.                                                                                                                                                                                                                                 |
| Liquidated Damages Upon Termination for Your Default | See Note (10) for formula                                             | Effective date of termination | Payable in lieu of any damages for our lost future revenue as a result of your default; but this is in addition to any other damages, costs, and expenses to which we may be entitled.                                                                                                                                 |

#### **Notes:**

- (1) All fees are payable to us and are non-refundable. At this time, we impose fees uniformly, unless otherwise indicated. However, we retain discretion to reduce fees in individual cases in our discretion.
- (2) "Gross Revenue" means the gross amount of revenue, whether for cash, by redemption of gift cards or certificates or for credit, regardless of collection, earned or received by you from any source in connection with the operation of the BHC Restaurant or with any similar or related activity, whether on or off your business premises, arising directly or indirectly from whatever source, including but not limited to sales from delivery or deliver services such as Door Dash, Uber Eats, Postmates, etc. Gross Revenue also includes any amount received from business insurance proceeds. "Gross Revenue" does not include: (i) the amount of any tax imposed by any governmental authority directly on sales and collected from customers, provided that the amount of any such tax is shown separately and is in fact paid by you to the appropriate governmental authority; (ii) the amount of any bona fide customer refunds; and (iii) tips or gratuities paid or payable to your employees.
- (3) Subfranchisees must pay us a Royalty Fee of 4.5% from Gross Revenues derived from the Subfranchised BHC Restaurants. The royalty you charge to Subfranchisees shall not exceed seven percent (7%) of Gross Revenues of Subfranchised BHC Restaurants.

Source: Item 6 — Other Fees (FDD pages 12–18)

Under what circumstances would a Bhc franchisee be required to pay an Indemnification fee?

Answer from 2025 FDD Document

Notes:

What This Means (2025 FDD)

Type of Fee	Amount	Due Date	Remarks
		requested by you.
Audit	$10,000 to $20,000	On receipt of invoice	You will pay us the costs of an audit to be performed if you fail to provide monthly financial statements, or if a random audit shows an understatement of Gross Revenue in excess of 2%. (6)
Late payment	$100 per occurrence, plus, the lesser of the daily equivalent of 10% per year ("Interest").	Upon demand	Interest is payable on entire overdue amount beginning with the date payment is due until payment, late charge and interest is paid in full.
Failure to Submit Required Report Fee (7)	$200 per week	Your bank account will be debited for failure to submit any requested report within ten (10) days of request	Payable if you fail to submit any required report or financial statement when due. Fines collected are paid to the Marketing and Promotion Fees contribution, if established, or us. You will continue to incur this fee until you submit the required reports. (7)
Dishonored Item Fee	The lesser of $100 per occurrence, or the highest amount allowed by law	As incurred	Payable if any check or EFT payment is not successful due to insufficient funds, stop payment, or any similar event.
Site Review Fee	$2,000 to $4,000	As incurred	You, your Affiliate Franchisee, and your Subfranchisees are solely responsible for selecting the site of your BHC Restaurant, which will be subject to our review and acceptance. We do not locate sites for you. However, we may, without obligation, assist you, your Affiliate Franchisee and your Subfranchisees in locating or evaluating a site for a reasonable fee, including Actual Costs.
Indemnification	Will vary under circumstances	As incurred	You reimburse losses we suffer from the operation of your business. (9)
Costs and Attorney's Fees	Will vary under circumstances	As incurred	Payable to us, to reimburse us for fees incurred by us in obtaining injunctive or legal relief for the enforcement of any item of the Franchise Agreement or for costs incurred for arbitration proceedings.
Type of Fee	Amount	Due Date	Remarks
---------------------------------------------------------------	--------------------------------------------------------------------------	----------------------------------	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Insurance (8)	Will vary under circumstances	As incurred	You must be fully covered in all areas of operating a business. If you do not procure and maintain the required insurance coverage we may, but are not required to, procure insurance coverage on your behalf and to charge the costs to you together with a reasonable fee for the expenses we incur. (8)
Management Fee	Reimbursement of our costs, plus a 15% administration charge	As incurred.	Payable if we manage the Master Franchised BHC Restaurant because of death or incapacity.
Liquidated Damages Upon Termination for Your Default	See Note (10) for formula	Effective date of termination	Payable in lieu of any damages for our lost future revenue as a result of your default; but this is in addition to any other damages, costs, and expenses to which we may be entitled.