Under what conditions can the Bhc franchisor terminate the Multi-Unit Master Franchise Agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
iate court in California. | | x. Choice of law | 16.13 | California law governs the arbitration of disputes under the MFA. | | Provision | Section in Multi-Unit Master Franchise Agreement | Summary Restaurants in the Development Area under the Development Schedule. | | e. Termination by franchisor without cause | 13.1 | We can terminate the MFA if you are in breach of that agreement (This provision is subject to state law.) | | f. Termination by franchisor with cause | 13.2 | We can terminate the MFA if you are in material breach of that agreement (This provision is subject to state law.) | | g. "Cause" defined – curable defaults | 13.1 | You have 30 days after notice to cure monetary defaults and other defaults (including defaults under a lease for your Master Franchise BHC Restaurants) that can be cured. (This provision is subject to state law.) | | h. "Cause" defined – non-curable defaults | 13.2 | Non-curable defaults: your bankruptcy or insolvency; your abandonment of the franchised business; you make material misrepresentations relating to your acquisition of the Franchise or you engage in conduct that reflects materially and unfavorably upon the operation and reputation of the Master Franchised Business or the BHC System; you and us agree in writing to terminate the Franchise; you fail, for a period of 10 days after notification of noncompliance, to comply with any federal, state or local law or regulation applicable to the operation of the Franchise; after curing any default, you engage in the same noncompliance whether or not such noncompliance is corrected after notice; you repeatedly fail to comply with one or more material requirements of the MFA, whether or not corrected after notice; the Franchised Business or your Master Franchise BHC Restaurant is seized, taken over, or foreclosed by a government official, creditor, lien holder or lessor, or that a final judgment against you remains unsatisfied for 30 days; you are convicted of a felony or any other criminal misconduct that is relevant to the operation of the Franchise; an audit or investigation conducted by us reveals that you knowingly maintained false books or records; or submitted false reports to us, or knowingly understated your Gross Revenue or withheld the reporting of any of your Gross Revenue (see further information in Section 13.2(a)(x)); we make a reasonable determination that your continued operation | | Provision | Section in Multi-Unit Master Franchise Agreement | Summary | |------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | of the Franchise will result in an imminent danger to public health or safety (This provision is subject to state law). | | i. Franchisee's obligations on termination or non- renewal | 15.1 | Obligations include removal of our Marks and other trademarks, return of all confidential and proprietary information and erasure of all copies of confidential and proprietary information and payment of amounts due (also see section "s" in this Table, below). | | j. Cross-Default | 15.3 | Any default by you shall be deemed to be a material default of each and every said agreement, and furthermore, in the event of termination, for any cause, of this Agreement, or any other agreement between the parties hereto, including, but not limited to, a MFA, between the parties hereto, Franchisor may, at its option, terminate any and all said agreements.
Source: Item 17 — Renewal, Termination, Transfer, And Dispute Resolution (FDD pages 43–49)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the franchisor can terminate the Multi-Unit Master Franchise Agreement (MFA) under several conditions, both with and without cause, though these provisions are subject to state law. Bhc can terminate the MFA if the franchisee is in breach of the agreement. In cases of material breach, Bhc can also terminate the MFA.
For curable defaults, the franchisee has 30 days after notice to cure monetary defaults and other defaults, including those under a lease for their Master Franchise Bhc Restaurants. However, certain non-curable defaults allow for immediate termination. These include bankruptcy or insolvency, abandonment of the franchised business, material misrepresentations relating to the acquisition of the franchise, or engaging in conduct that reflects materially and unfavorably upon the operation and reputation of the Master Franchised Business or the Bhc System. Termination can also occur if the franchisee and Bhc agree in writing to terminate the Franchise, or if the franchisee fails to comply with any applicable federal, state, or local law or regulation for 10 days after notification of noncompliance.
Further reasons for termination include repeated non-compliance with material MFA requirements, seizure or foreclosure of the Franchised Business or the Master Franchise Bhc Restaurant by a government official, creditor, lien holder, or lessor, or an unsatisfied final judgment against the franchisee for 30 days. A felony conviction or any other criminal misconduct relevant to the operation of the Franchise, knowingly maintaining false books or records, submitting false reports, or understating Gross Revenue also constitute grounds for termination. Finally, Bhc can terminate the MFA if they reasonably determine that the franchisee's continued operation will result in an imminent danger to public health or safety.
Additionally, any default by the franchisee is deemed a material default of every agreement between the franchisee and Bhc, and in the event of termination of any agreement, Bhc can terminate any and all agreements. This cross-default provision means that a breach in one area can have significant repercussions across the entire franchise relationship. These termination conditions are typical in franchise agreements to protect the brand and maintain standards across the Bhc system.