Under what circumstances is the transfer of a Bhc Master Franchisee's interest not considered an assignment?
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 Franchisee's interest in the franchise agreement is not always considered an assignment. Specifically, if the Master Franchisee is an individual, or if a Principal Equity Operator owning a majority equity interest in the Master Franchisee (if an entity) dies or becomes legally incapacitated, the transfer of their interest to their spouse, parent, or adult children will not be deemed an assignment by the Master Franchisee.
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 Master Franchisee, who has been satisfactorily trained by Bhc, must be responsible for the franchised business. This ensures that the operation of the Bhc restaurant continues without disruption and maintains Bhc's standards.
Furthermore, in the event of the death of an individual Master Franchisee or a Majority Equity Owner, their interest in the agreement or 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 there is no will, according to the laws of intestacy. Adequate provisions 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 capable heir or Principal Equity Operator, Bhc may operate the restaurant on the Master Franchisee's behalf for up to 90 days, with possible renewals, and can place an interim manager, with the Master Franchisee responsible for covering the manager's expenses and a 15% management administration fee.