Under what conditions can the Bhc franchisor cure a master franchisee's default?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) In addition to all other remedies herein granted, if Master Franchisee breaches in the performance of any of Master Franchisee's obligations or breaches any term or condition of this
Agreement or any related agreement involving third parties, Franchisor may, at Franchisor's election, immediately or at any time thereafter, without waiving any claim for breach hereunder and without notice to Master Franchisee, cure the breach for Master Franchisee's account and on Master Franchisee's behalf, and all costs or expenses including attorney's fees incurred by Franchisor on account thereof are due and payable by Master Franchisee to Franchisor on demand.
(b) If Franchisor terminates this Agreement for cause, Franchisor has the right (but not the obligation) to assume the lease for the BHC Restaurant premises and to purchase Master Franchisee's assets pursuant to section 15.2(d) below.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisor has the right to cure a master franchisee's default under certain conditions. Specifically, if the master franchisee breaches any obligation or violates any term or condition of the agreement, or any related agreement involving third parties, Bhc has the option to step in and correct the breach. This action can be taken immediately or at any time after the breach occurs.
Bhc can cure the breach without providing prior notice to the master franchisee and without waiving any claims related to the breach. When Bhc cures a breach on behalf of the master franchisee, all associated costs and expenses, including attorney's fees, become the responsibility of the master franchisee. Bhc can demand immediate payment for these costs.
This provision in the franchise agreement allows Bhc to protect its brand and maintain operational standards, even if a master franchisee is failing to meet their obligations. For a prospective master franchisee, this means they could be liable for significant expenses if Bhc deems it necessary to correct their operational or contractual shortcomings. It is important to note that this right to cure does not obligate Bhc to act, but it provides them with a mechanism to intervene and protect their interests.
Furthermore, if Bhc terminates the agreement due to a cause, it has the right, but not the obligation, to assume the lease for the Bhc Restaurant premises and purchase the master franchisee's assets. This highlights the importance of understanding all obligations and potential ramifications outlined in the franchise agreement.