Under what circumstances does Bhc have a right of first refusal regarding the Master Franchisee's interest?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.3 Right of First Refusal.
- (a) Except for a Transfer (i) to Master Franchisee's heirs, personal representatives, or conservators in the case of death or legal incapacity as provided in section 12.4 hereof, Master Franchisee's right to Transfer Master Franchisee's entire interest in the Franchise granted by this Agreement under section 12.2 hereof is subject to Franchisor's right of first refusal, which will be exercised in accordance with the terms of this section 12.3.
- (b) Master Franchisee must deliver to Franchisor a written notice setting forth (i) all of the terms and conditions of any bona fide offer relating to a proposed Assignment by Master Franchisee, and (ii) all available information concerning Master Franchisee's Assignee including a detailed summary of how the proposed assignee meets Franchisor's qualifications for a new BHC Master Franchisee, and any other related information requested by Franchisor.
If the specified terms and conditions include consideration of a non-monetary nature, such consideration must be expressed in reasonably equivalent monetary terms, and if it involves matters that cannot be stated in monetary terms, such consideration will not be considered in connection with Franchisor's right of first refusal.
(c) Within 15 days after Franchisor's receipt of such notice (or if Franchisor requests additional information, within 10 days after receipt of such additional information), Franchisor may either (i) consent or withhold Franchisor's consent to such Assignment by Master Franchisee, in accordance with section 12.2 hereof, or (ii) at Franchisor's option, accept the Assignment by Master Franchisee itself or on behalf of Franchisor's nominee upon the terms and conditions specified in the notice.
(d) If Franchisor elects not to exercise its right of first refusal and consent to the Assignment by Master Franchisee, Master Franchisee will for a period of 60 days, and subject to the provisions of section 12.2 hereof, be free to assign this Agreement to such proposed Assignee upon the terms and conditions specified in said notice.
If, however, these terms are modified in any material manner (as determined by Franchisor), or if said 60-day period expires, Franchisor will again have such right of first refusal with respect thereto and Master Franchisee will again be required to comply with section 12.3(b) above.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc maintains a right of first refusal concerning the Master Franchisee's interest in the franchise. This means that before a Master Franchisee can transfer their interest to a third party, Bhc has the option to purchase the franchise on the same terms and conditions offered by the third party. This right applies to the Master Franchisee's entire interest in the franchise granted under the agreement.
Bhc's right of first refusal does not apply to transfers to the Master Franchisee's heirs, personal representatives, or conservators in the event of death or legal incapacity, as outlined in section 12.4 of the agreement. However, any subsequent transfer by these individuals would be subject to Bhc's right of first refusal.
To initiate a transfer subject to Bhc's right of first refusal, the Master Franchisee must provide written notice to Bhc. This notice must include all terms and conditions of the bona fide offer from the proposed assignee, as well as comprehensive information about the assignee, including their qualifications to become a Bhc Master Franchisee. If the offer includes non-monetary considerations, these must be expressed in equivalent monetary terms for Bhc to evaluate the offer.
Within 15 days of receiving the notice (or 10 days after receiving additional requested information), Bhc can either consent to the assignment, withhold consent, or exercise its right of first refusal by accepting the assignment itself or through a nominee, based on the terms specified in the notice. If Bhc chooses not to exercise its right of first refusal and consents to the assignment, the Master Franchisee is then free to assign the agreement to the proposed assignee within a 60-day period, subject to the provisions outlined in section 12.2 of the agreement. If the terms are materially modified or the 60-day period expires, Bhc's right of first refusal is reinstated, and the Master Franchisee must again comply with the notification requirements.