Under what circumstances is Bhc not obligated to renew a franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Notwithstanding section 5.2(a) above, Franchisor is not obligated to renew Franchisee's rights granted under this Agreement for an additional term if one or more of the following applies or occurs:
- (i) Franchisee gives Franchisor written notice of Franchisee's intention not to renew this Agreement at least 120 days before the expiration of the initial term or any successor term;
- (ii) Termination of this Agreement would be permitted pursuant to sections 13.1 or 13.2 hereof;
- (iii) Franchisee and Franchisor agree not to renew the Franchise Agreement;
- (iv) Franchisor withdraws from distributing its products or services through Franchises in the geographic market served by Franchisee.
- (v) At the time of renewal, Franchisee or any Principal Equity Operator has been convicted of a felony or a crime involving moral turpitude, consumer fraud or any other offense
that is reasonably likely, in Franchisor's judgment, to have a materially adverse effect on the Marks, the System, or the goodwill associated with the Marks or System; or
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc is not obligated to renew a franchise agreement under certain conditions. Specifically, Bhc is not obligated to renew the agreement if the franchisee provides written notice of their intention not to renew at least 120 days before the expiration of the current term. This allows Bhc ample time to plan for the transition and find a new franchisee if desired.
Additionally, Bhc is not obligated to renew if termination of the agreement would be permitted under sections 13.1 or 13.2 of the agreement, which likely cover default or breach scenarios. Bhc also does not have to renew if both Bhc and the franchisee mutually agree not to renew the franchise agreement. This provides flexibility for both parties if either decides that continuing the franchise relationship is no longer beneficial.
Furthermore, Bhc is not obligated to renew if Bhc withdraws from distributing its products or services through franchises in the geographic market served by the franchisee. This could occur if Bhc decides to change its business model or exit a particular market. Finally, Bhc is not obligated to renew if, at the time of renewal, the franchisee or any principal equity operator has been convicted of a felony or a crime involving moral turpitude, consumer fraud, or any other offense that could reasonably harm Bhc's brand, system, or goodwill. This protects Bhc's reputation and the integrity of its franchise system.