Under what conditions is Bhc Franchisor allowed to transfer the Franchise Agreement and its associated rights?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ection 6.1 hereof and any other training or orientation programs then required by Franchisor will be satisfactorily completed by other necessary personnel within 30 days after the execution by Franchisee's Assignee of a Franchise Agreement, provided, however, Franchisee's Assignee must also agree to pay for all expenses related to this training, such as travel(at the rate in effect at the time of transfer); and
(vii) upon approval of the transfer, Franchisee pays Franchisor a non-refundable "Transfer Fee" of 100% of Franchisor's then-current Initial Franchise Fee per Franchised BHC Restaurant
(d) Franchisee does not have a right to pledge, encumber, hypothecate or otherwise give any third party a security interest in this Agreement in any manner whatsoever (except that with Franchisor's consent, which will not be unreasonably withheld, Franchisee may pledge a security interest in this Agreement in connection with a Small Business Administration loan), nor sub franchise or otherwise transfer, or attempt to sub franchise or otherwise transfer the Franchised Business, or to transfer or sub franchise a portion but not all of Franchisee's rights hereunder without Franchisor's express prior written consent, which may be withheld for any reason in Franchisor's sole discretion.
(e) Any attempt by Franchisee to assign the Franchise, all (or substantially all) the assets of the Franchised BHC Restaurant, or a controlling interest in Franchisee (if an entity) in violation of this section 12.2 is void and will (i) constitute a material breach of this Agreement, (ii) cause this Agreement (and in Franchisor's sole discretion any or all other agreements between Franchisee and Franchisor, or between Franchisee and Franchisor's affiliates) to be subject to immediate termination without further notice, and (iii) confer no rights or interest whatsoever under this Agreement upon any other party.
(f) Upon Franchisor's consent to any Assignment by Franchisee, Franchisee must bring all accounts with Franchisor current and transfer to Franchisee's assignee all service agreements or contracts 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.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee cannot transfer the franchise agreement or any rights without the franchisor's express prior written consent. Bhc may withhold consent for any reason at its sole discretion. Any attempt to transfer the franchise without this consent is void and constitutes a material breach of the agreement, potentially leading to immediate termination of the agreement and forfeiture of any rights under it.
Upon Bhc's approval of a transfer, the franchisee must ensure all accounts with Bhc are current. Additionally, the franchisee must transfer all service agreements or contracts signed by customers of the franchised business to the assignee. The franchisee is also required to execute an agreement among themselves, Bhc, and the assignee, which includes a mutual release between the franchisee and Bhc. Furthermore, the franchisee must enter into an assignment of the lease for the BHC Restaurant premises, including the transfer of rights, title, and interest to telephone numbers and utilities to the assignee.
There are exceptions to Bhc's right of first refusal for transfers to the franchisee's heirs, personal representatives, or conservators in cases of death or legal incapacity. However, even in these cases, the franchisee must still comply with certain sections of the agreement, including providing full disclosure of the terms of the transfer to Bhc at least three business days before the transaction closes and delivering copies of all executed paperwork to Bhc within three business days after closing.
If a franchisee seeks to transfer their interest to an affiliated entity, they must provide written notice to Bhc and obtain written consent, which will not be unreasonably withheld, provided they are not attempting a transfer already restricted in other sections of the agreement. Overall, Bhc retains significant control over franchise transfers to ensure the continued quality and consistency of the brand.