Under what circumstances is a transfer of a Bhc Master Franchise interest NOT subject to the Franchisor's right of first refusal?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
12.4 Transfers upon the Death or Incapacity of an Individual Master Franchisee or Majority Equity Owner.
- (a) Notwithstanding the foregoing, in the event of Master Franchisee's death or legal incapacity if Master Franchisee is an individual, or the death or legal incapacity of a Principal Equity Operator of Master Franchisee owning a majority equity interest ("Majority Equity Owner") in Master Franchisee (if an entity), the transfer of Master 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 Master Franchisee, provided a qualified and trained General Manager remains employed at the BHC Restaurant or another responsible management employee or agent of Master Franchisee satisfactorily trained by Franchisor will be responsible for the Franchised Business.
- (b) In the event of an individual Master 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 BHC Restaurant on Master 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. Franchisor can place an interim manager Master Franchised BHC Restaurant, and Master Franchisee must pay Franchisor the manager's salary, transportation, lodging and related living expenses, and our management administration fee of 15%.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a transfer of a Master Franchise interest is not subject to Bhc's right of first refusal under specific circumstances related to death or legal incapacity. Specifically, if the Master Franchisee is an individual, or if a Principal Equity Operator owning a majority equity interest in the Master Franchisee dies or becomes legally incapacitated, the transfer of their interest in the Franchise Agreement to their spouse, parent, or adult children will not be considered an Assignment by Master Franchisee.
However, this exception is conditional. A qualified and trained General Manager must remain employed at the Bhc Restaurant, or another responsible management employee or agent of the Master Franchisee, satisfactorily trained by Bhc, must be responsible for the Franchised Business. This ensures the continued smooth operation of the franchise even during the transition of ownership due to unforeseen circumstances.
In the event of death, the interest in the Franchise Agreement or equity interest in the franchise entity must transfer as soon as practicable, but no more than 270 days after the date of death. This transfer must align with the deceased person's will or the laws of intestacy if there is no will, ensuring proper distribution of the estate. Adequate provision must also be made for the management of the Franchised Business during this period.
If Bhc determines that there is no imminent sale to a qualified successor or no heir or Principal Equity Operator capable of operating the Franchise, Bhc has the option to commence operating the Bhc Restaurant on the Master Franchisee's behalf. This operation can last for up to 90 days, with potential renewals as deemed necessary by Bhc, up to one year. Bhc will also periodically discuss the status with the heirs of the decedent. Bhc can place an interim manager at the BHC Restaurant, with the Master Franchisee responsible for covering the manager's salary, transportation, lodging, related living expenses, and a management administration fee of 15%.