Under what condition can Bhc terminate the franchise agreement after providing written notice?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2 Immediate Termination.
(a) Franchisor has the right to immediately terminate this Agreement upon notice to Franchisee without an opportunity to cure if:
(i) Franchisee admits its inability to pay its debts as they come due, or Franchisee or the business to which the Franchise relates (A) has been the subject of an order for relief in bankruptcy, (B) is judicially determined to be insolvent or (C) has all or a substantial part of its assets assigned to or for the benefit of any creditor;
(ii) Franchisee Abandons the Franchise by failing to operate the Franchised BHC Restaurant for five consecutive business days during which Franchisee is required to operate the business under the terms of this Agreement, or any shorter period after which it is not unreasonable under the facts and circumstances for Franchisor to conclude that Franchisee does not intend to continue to operate the Franchise, unless such failure to operate is due to fire, flood, earthquake or other similar causes beyond Franchisee's control;
(iii) Franchisor and Franchisee agree in writing to terminate the Franchise;
(iv) Franchisee makes any material misrepresentations relating to the acquisition of the Franchise or Franchisee engages in conduct that reflects materially and unfavorably upon the operation and reputation of the Franchised Business or the System;
(v) Franchisee fails after notification of noncompliance, to comply timely with any federal, state, or local law or regulation, including, but not limited to, all health, safety, building, and labor laws or regulations applicable to the operation of the Franchise;
(vi) After curing any failure in accordance with section 13.3 below, Franchisee engages in the same noncompliance whether or not such noncompliance is corrected after notice;
(vii) Franchisee repeatedly fails to comply with one or more material requirements of this Agreement, whether or not corrected after notice;
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc can immediately terminate the franchise agreement with written notice to the franchisee under several conditions without providing an opportunity to cure the issue. These conditions include if the franchisee admits inability to pay debts, becomes subject to bankruptcy proceedings, is judicially determined to be insolvent, or assigns a substantial part of its assets for the benefit of creditors.
Additionally, Bhc can terminate the agreement if the franchisee abandons the franchise by failing to operate the BHC restaurant for five consecutive business days, or for a shorter period if Bhc reasonably concludes the franchisee doesn't intend to continue operations, unless the failure is due to events beyond the franchisee's control like fire or natural disasters. Termination is also possible if both Bhc and the franchisee agree in writing to terminate the franchise.
Furthermore, Bhc can terminate the agreement if the franchisee makes material misrepresentations during the franchise acquisition or engages in conduct that reflects negatively on the franchise's operation or the Bhc system's reputation. Failure to comply with federal, state, or local laws or regulations, including health, safety, building, and labor laws, after being notified of noncompliance, can also lead to immediate termination. Similarly, engaging in the same noncompliance after curing it, or repeatedly failing to comply with material requirements of the agreement, whether corrected after notice or not, are grounds for termination.