Under what conditions can the Bhc franchise agreement be modified or changed?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
renew the Franchise Agreement;
- (iv) Franchisor withdraws from distributing its products or services through Franchises in the geographic market served by Franchisee.
- (v) At the time of renewal, Franchisee or any Principal Equity Operator has been convicted of a felony or a crime involving moral turpitude, consumer fraud or any other offense
that is reasonably likely, in Franchisor's judgment, to have a materially adverse effect on the Marks, the System, or the goodwill associated with the Marks or System; or
- (d) As a condition to renewing Franchisee's rights, duties and obligations hereunder, not later than 90 days before the end of the term that is expiring, Franchisee and Franchisor must sign either (i) Franchisor's then-current standard Franchise Agreement modified by addendum to remove provisions that only apply to a new franchisee, such as initial franchise fee and initial training requirements ("Renewal Franchise Agreement") or (ii) an addendum to this Agreement extending its term for an additional 10 year term. IN ADDITION TO NOT GRANTING ANY ADDITIONAL RIGHTS BEYOND THOSE GRANTED IN THIS AGREEMENT, THE RENEWAL FRANCHISE AGREEMENT MAY CONTAIN OTHER TERMS THAT ARE SUBSTANTIALLY DIFFERENT FROM THOSE IN THIS AGREEMENT. The Renewal Franchise Agreement, when executed, will supersede this Agreement.
- (e) At the time of renewal, Franchisee must have satisfied all monetary obligations owed by Franchisee to Franchisor and to Franchisor's affiliates and all other material obligations under this Agreement, and Franchisor may examine Franchisee's books and records to verify compliance with this requirement anytime during normal business hours within 120 days of Franchisee's renewal date.
- (f) Before or not later than 90 days after Franchisee's execution of a Renewal Franchise Agreement for an additional term, Franchisee must make such physical modifications (i.e., remodel) to Franchisee's Franchised BHC Restaurant as are reasonably necessary so that they are substantially consistent with the then current Trade Dress or System requirements, and so that they can accommodate new BHC Products, if any. Franchisee must also bring Franchisee's Franchised BHC Restaurant and equipment, materials, and supplies into compliance with the standards then applicable to new BHC franchises.
- (g) When Franchisee signs the Renewal Franchise Agreement, Franchisee must pay Franchisor a "Renewal Fee" of $40,000.
6. TRAINING AND ASSISTANCE
6.1 Initial Training.
(a) It is critically important for Franchisee's General Manager and Principal Equity Operators to understand the Franchised Business and the System, and for Franchisee's General Manager and other key employees to have been trained how to operate the Franchised Business.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchise agreement can be modified under specific circumstances, primarily related to renewals, system standards, and alterations to restaurant plans. Bhc requires franchisees to maintain and periodically refurbish their restaurants to conform to current building design, trade dress, and color schemes. These updates, along with potential structural changes and equipment upgrades, may be necessary to comply with system-wide standards or accommodate new Bhc products. Bhc anticipates trade dress updates will be required no more than once every five years.
Bhc also requires franchisees to make upgrades and refurbishments before renewing their franchise agreement. Otherwise, modifications and expenditures are required if Bhc determines in good faith that the restaurant is substantially inconsistent with system-wide standards, impacting its ability to promote Bhc products or damaging the brand's integrity. Any changes to restaurant plans must receive written approval from Bhc before implementation. Bhc also retains the right to access the restaurant during leasehold improvements, make video records of the process, and require alterations deemed necessary.
Furthermore, the renewal of the franchise agreement itself involves modifications. No later than 90 days before the end of the current term, the franchisee and Bhc must sign either a Renewal Franchise Agreement or an addendum extending the current agreement. The Renewal Franchise Agreement may contain terms that are substantially different from the original agreement and will supersede it upon execution. Franchisees must also satisfy all monetary and material obligations at the time of renewal and pay a Renewal Fee of $40,000.
These stipulations ensure that Bhc maintains consistent brand standards and operational practices across all franchise locations, while also allowing for necessary updates and improvements over time. For a prospective franchisee, this means being prepared for ongoing investments in the restaurant's appearance and equipment, as well as potential changes to the franchise agreement upon renewal.