Under what conditions can Bhc 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, Bhc can terminate the Multi-Unit Master Franchise Agreement (MFA) under several conditions, both with and without cause, although these provisions are subject to state law. Bhc can terminate the MFA if the franchisee is in breach of the agreement. A material breach also allows Bhc to terminate the agreement.
'Cause' for termination includes both curable and non-curable defaults. Curable defaults, such as monetary defaults or other defaults under a lease for the Master Franchise Bhc Restaurants, can lead to termination if not cured within 30 days after notice. Non-curable defaults include events like bankruptcy or insolvency, abandonment of the franchised business, material misrepresentations related to the franchise acquisition, or engaging in conduct that reflects negatively on the Master Franchised Business or the Bhc System.
Further non-curable defaults include failing to comply with federal, state, or local laws or regulations for 10 days after notification, repeated noncompliance with the MFA, seizure or foreclosure of the franchised business, a final unsatisfied judgment against the franchisee for 30 days, conviction of a felony, maintaining false books or records, understating gross revenue, or if Bhc reasonably determines that the continued operation of the Franchise will result in an imminent danger to public health or safety. Additionally, any default by the franchisee is considered a material default of all agreements, and termination of any agreement allows Bhc to terminate all agreements at its option.