Under what circumstances is a Bhc franchisee required to reimburse the franchisor for collection costs?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor is entitled to reimbursement from Franchisee upon Franchisor's demand of all costs Franchisor has incurred (including reasonable attorneys' fees and investigator's fees) to enforce Franchisor's rights under this Agreement, including actions to collect any amounts due and delinquent hereunder.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee is required to reimburse Bhc for all costs incurred to enforce its rights under the Franchise Agreement. These costs include reasonable attorneys' fees and investigator's fees. This obligation extends to any actions Bhc takes to collect amounts due and delinquent from the franchisee.
This means that if a Bhc franchisee fails to meet their financial obligations or violates the terms of the Franchise Agreement, they will be responsible for covering Bhc's expenses in pursuing legal action to rectify the situation. This could include not only the unpaid amounts but also the legal and investigative costs incurred by Bhc to recover those amounts.
This provision is fairly standard in franchise agreements, as it protects the franchisor from incurring losses due to a non-compliant franchisee. It also incentivizes franchisees to adhere to the agreement and meet their financial obligations to avoid potential legal action and associated costs. Prospective franchisees should carefully consider this clause and ensure they have sufficient financial resources to meet their obligations under the Franchise Agreement to avoid triggering this reimbursement requirement.