Under what condition can Bhc require a more frequent payment schedule for Royalty Fees from Subfranchised Bhc Restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee from Affiliate Franchised BHC Restaurants | 4.5% of Gross Revenue (2)(3) | Payable monthly on the following 5th days for the previous month (unless that day is a banking holiday, in which case the Royalties are due and payable on the next business day). Royalties will be calculated on the Gross Revenues received during every two (2) weeks. | Paid to us. We require payment by electronic funds transfer ("EFT"). We reserve the right, upon 90 days' written notice to you, to require you to pay Royalty Fees on a more frequent basis, including monthly or weekly |
| Royalty Fee from Subfranchised BHC Restaurants | 4.5% Gross Revenues of Subfranchised BHC Restaurants. (3) | Same date as the Royalty Fee from Affiliate Franchised BHC Restaurants | Paid to us. We require payment by electronic funds transfer ("EFT"). We reserve the right, upon 90 days' written notice to you, to require you to pay Royalty Fees on a more frequent basis, including monthly or weekly The maximum royalty you can charge Subfranchisee is 7% of Gross Revenues. |
Source: Item 6 — Other Fees (FDD pages 12–18)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc can modify the payment schedule for Royalty Fees from Subfranchised Bhc Restaurants under specific conditions. Currently, these royalty fees, set at 4.5% of Gross Revenues, are due monthly, specifically on the 5th day of the following month for the previous month's revenues, unless that day is a banking holiday. In such cases, the royalties are due on the next business day. These payments are required to be made via electronic funds transfer (EFT).
Bhc reserves the right to change this payment schedule, requiring franchisees to pay Royalty Fees more frequently, such as monthly or even weekly. However, Bhc must provide the franchisee with a 90-day written notice before implementing such a change. This advance notice allows franchisees time to adjust their financial processes to accommodate the new payment schedule.
This provision is important for prospective Bhc franchisees to understand, as it introduces a degree of uncertainty regarding the timing of royalty payments. While the standard monthly schedule provides a predictable cash flow management scenario, the possibility of a more frequent payment schedule could strain a franchisee's working capital, especially during periods of lower sales or unexpected expenses. Franchisees should factor this potential change into their financial planning and ensure they have sufficient reserves to handle more frequent royalty payments if Bhc chooses to implement this option.