Under what condition does a Bhc Master Franchisee need to enter into a Subfranchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
When Master Franchisee opens an additional BHC Restaurant under the Development Schedule, Master Franchisee must enter into Subfranchise Agreement for that additional BHC Restaurant. So long as Master Franchisee is in good standing under this Agreement, Franchisee will continue to have the right to open and operate, including distribute BHC Products and items authorized under this Agreement, receive fees from, as applicable all BHC Restaurants in the Development Area (including both Franchised BHC Restaurant and Subfranchised BHC Restaurants) in accordance with the Development Schedule ("Operating Rights).
3.4 Development Obligations.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is required to enter into a Subfranchise Agreement under specific conditions related to establishing and operating Bhc restaurants within their designated development area.
Specifically, the Master Franchisee must enter into a Subfranchise Agreement when opening an additional Bhc Restaurant under the Development Schedule. This obligation ensures that each new Bhc restaurant, whether operated by the Master Franchisee's affiliate or a third-party subfranchisee, is governed by a formal agreement that outlines the terms and conditions of operation.
Before granting subfranchises to third parties, the Master Franchisee must first establish and operate at least one Bhc restaurant through an Affiliate Franchisee, which also requires a separate Subfranchise Agreement. This initial step ensures that the Master Franchisee has practical experience with the Bhc system before expanding through subfranchising. The Master Franchisee must also conduct an approval process to confirm that each potential Subfranchisee and each potential Subfranchised BHC Restaurants meets all of Franchisor's then current minimum requirements.