Under what circumstances is the transfer of a Bhc franchise interest due to death or incapacity not considered an assignment?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.4 Transfers upon the Death or Incapacity of an Individual Franchisee or Majority Equity Owner.
(a) Notwithstanding the foregoing, in the event of Franchisee's death or legal incapacity if Franchisee is an individual, or the death or legal incapacity of a Principal Equity Operator of Franchisee owning a majority equity interest ("Majority Equity Owner") in Franchisee (if an entity), the transfer of Franchisee's or the deceased Majority Equity Owner's interest in this Agreement to his or her spouse, parent or adult children, will not be deemed Assignment by Franchisee, provided a qualified and trained General Manager remains employed at the Franchised BHC Restaurant or another responsible management employee or agent of Franchisee satisfactorily trained by Franchisor will be responsible for the Franchised Business.
(b) In the event of an individual Franchisee's death or the death of a Majority Equity Owner, such person's interest in this Agreement or its equity interest in the franchise entity must Transfer as soon as practicable (but not more than 270 days) after the date of death in accordance with such person's will or, if such person dies without a will, in accordance with laws of intestacy governing the distribution of such person's estate, provided that adequate provision is made for the management of the Franchised Business.
If Franchisor determines (i) there is no imminent sale to a qualified successor or (ii) there is no heir or other Principal Equity Operator capable of operating the Franchise, Franchisor may (but is not obligated to) immediately commence operating the Franchised BHC Restaurant on Franchisee's behalf for a period of up to 90 days, renewable as Franchisor deems necessary for up to one year and Franchisor will periodically discuss the status with the heirs of the decedent.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a transfer of franchise interest due to death or incapacity is not considered an assignment under specific conditions. If the franchisee is an individual, or if a Principal Equity Operator owning a majority equity interest in the franchise (if an entity) dies or becomes legally incapacitated, the transfer of their interest in the Franchise Agreement to their spouse, parent, or adult children will not be deemed an assignment.
However, this exception is conditional. A qualified and trained General Manager must remain employed at the Bhc restaurant. Alternatively, another responsible management employee or agent of the franchisee, satisfactorily trained by Bhc, must be responsible for the franchised business. This ensures the continued competent operation of the franchise even after the transfer of ownership due to death or incapacity.
Furthermore, in the event of the death of an individual franchisee or a Majority Equity Owner, their interest in the Franchise Agreement or their equity interest in the franchise entity must be transferred as soon as practicable, but no more than 270 days after the date of death. This transfer must occur in accordance with the person's will or, if they die without a will, according to the laws of intestacy governing the distribution of their estate. Adequate provision must also be made for the management of the franchised business during this period. Bhc retains the right to operate the franchise on the franchisee's behalf if there is no imminent sale to a qualified successor or no capable heir, for up to 90 days, renewable for up to one year, while discussing the status with the decedent's heirs.