Under what circumstances is Bhc not obligated to renew a franchise agreement, even if the franchisee provides timely notice?
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, even if a franchisee provides timely written notice of their intent to renew, Bhc is not obligated to renew the franchise agreement under certain conditions. These conditions include if the franchisee notifies Bhc of their intention not to renew the agreement, if termination of the agreement would be permitted under sections 13.1 or 13.2 of the agreement, or if the franchisee and Bhc mutually agree not to renew the franchise agreement.
Additionally, Bhc is not obligated to renew the agreement if Bhc withdraws from distributing its products or services through franchises in the geographic market served by the franchisee. Furthermore, 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 is reasonably likely to have a materially adverse effect on the Marks, the System, or the goodwill associated with the Marks or System, Bhc is not obligated to renew the agreement.
These stipulations are important for prospective franchisees to consider, as they highlight circumstances that could prevent renewal despite proper notification. Franchisees should carefully review sections 13.1 and 13.2 of the franchise agreement to understand the conditions under which termination would be permitted, as this directly impacts their renewal rights. The potential for non-renewal due to criminal convictions or actions that harm the brand's reputation also underscores the importance of maintaining ethical and legal compliance throughout the franchise term.