Under what conditions is Bhc Franchisor allowed to transfer the Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
cts signed by customers of the Franchised Business conducted at Franchisee's Franchised BHC Restaurant. Also, Franchisee must (i) execute an agreement among Franchisee, Franchisor and Franchisee's assignee effecting the Assignment by Franchisee, which will include a mutual release between Franchisee and Franchisor and (ii) enter into an assignment of the lease for the Franchised BHC Restaurant premises (including an assignment to the assignee of Franchisee's rights, title and interest to telephone numbers and utilities respecting the Franchised BHC Restaurant).
12.3 Right of First Refusal.
- (a) Except for a Transfer (i) to Franchisee's heirs, personal representatives, or conservators in the case of death or legal incapacity as provided in section 12.4 hereof, Franchisee's right to Transfer Franchisee's entire interest in the Franchise granted by this Agreement under section 12.2 hereof is subject to Franchisor's right of first refusal, which will be exercised in accordance with the terms of this section 12.3.
- (b) Franchisee must deliver to Franchisor a written notice setting forth (i) all of the terms and conditions of any bona fide offer relating to a proposed Assignment by Franchisee, and (ii) all available information concerning Franchisee's Assignee including a detailed summary of how the proposed assignee meets Franchisor's qualifications for a new BHC franchisee, and any other related information requested by Franchisor. If the specified terms and conditions include consideration of a non-monetary nature, such consideration must be expressed in reasonably equivalent monetary terms, and if it involves matters that cannot be stated in monetary terms, such consideration will not be considered in connection with Franchisor's right of first refusal.
- (c) Within 15 days after Franchisor's receipt of such notice (or if Franchisor requests additional information, within 10 days after receipt of such additional information), Franchisor may either (i) consent or withhold Franchisor's consent to such Assignment by Franchisee, in accordance with section 12.2 hereof, or (ii) at Franchisor's option, accept the Assignment by Franchisee itself or on behalf of Franchisor's nominee upon the terms and conditions specified in the notice.
- (d) If Franchisor elects not to exercise its right of first refusal and consent to the Assignment by Franchisee, Franchisee will for a period of 60 days, and subject to the provisions of section 12.2 hereof, be free to assign this Agreement to such proposed Assignee upon the terms and conditions
specified in said notice. If, however, these terms are modified in any material manner (as determined by Franchisor), or if said 60-day period expires, Franchisor will again have such right of first refusal with respect thereto and Franchisee will again be required to comply with section 12.3(b) above. Detailed terms of assignment must be delivered to Franchisor no later than 72 hours following the close of escrow or other consummation of the transaction.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee's ability to transfer their interest in the franchise is subject to certain conditions and rights retained by Bhc. Specifically, Bhc has a right of first refusal, meaning that before a franchisee can transfer their interest to a third party, Bhc has the option to accept the assignment themselves or nominate another party to do so under the same terms. This right of first refusal does not apply to transfers to the franchisee's heirs, personal representatives, or conservators in cases of death or legal incapacity, although it would apply to any subsequent transfer by those parties.
To initiate a transfer, the franchisee must provide Bhc with written notice detailing all terms and conditions of the proposed assignment and comprehensive information about the prospective assignee, including their qualifications. Bhc then has a period to either consent to the assignment or exercise its right of first refusal. If Bhc chooses not to exercise its right of first refusal and consents to the assignment, the franchisee is then free to proceed with the transfer to the proposed assignee, subject to compliance with other provisions outlined in the agreement.
Any attempt to transfer the franchise without Bhc's express prior written consent is considered a material breach of the agreement, potentially leading to immediate termination of the agreement and other related agreements at Bhc's discretion. Furthermore, such unauthorized attempts confer no rights or interests to any other party. Upon Bhc's approval of a transfer, the franchisee must ensure all accounts with Bhc are current and transfer all relevant service agreements or contracts to the assignee. The franchisee must also execute an agreement among themselves, Bhc, and the assignee, which includes a mutual release between the franchisee and Bhc, and facilitate the assignment of the lease for the restaurant premises to the assignee.