What written acknowledgement is required from the Master Franchisee regarding the cause of inactivity at the Bhc restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
"Abandoned" means cessation of operation of the Franchised Business for a period of five consecutive business days, without Franchisor's prior written consent. A repeated pattern of inactivity at Master Franchised BHC Restaurant for periods of less than five consecutive business days may result in the Franchised Business being deemed Abandoned by Master Franchisee if in Franchisor's judgment such inactivity adversely impacts the Franchised Business. However, Master Franchised BHC Restaurant will not be deemed Abandoned if the inactivity is due to natural disasters or other matters reasonably beyond Master Franchisee's control, provided that Master Franchisee gives Franchisor notice of any such closure within five business days after the initial occurrence of the event resulting in such inactivity, and Master Franchisee acknowledges in writing that such inactivity is due to one of the foregoing causes, and provided further that Master Franchisee re-establish the Franchised Business and be fully operational within 180 days after the initial occurrence of the event resulting in such inactivity, or such longer period as Franchisor may permit.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if a Bhc restaurant experiences inactivity due to natural disasters or other events beyond the Master Franchisee's control, the Master Franchisee must provide written acknowledgment to the Franchisor regarding the cause of the inactivity. This written notice must be given to Bhc within five business days after the event that caused the inactivity.
This acknowledgement is important because it allows the Master Franchisee to avoid the restaurant being classified as "Abandoned," which Bhc defines as cessation of operation for five consecutive business days without prior written consent from Bhc. If the inactivity is properly reported and acknowledged in writing, the Master Franchisee is then required to re-establish the Franchised Business and be fully operational within 180 days after the initial occurrence of the event, unless Bhc permits a longer period.
This requirement protects both Bhc and the Master Franchisee. Bhc needs to ensure its restaurants maintain consistent operations and brand presence, while the Master Franchisee is protected from penalties or termination due to circumstances outside their control, provided they follow the notification and re-establishment procedures. This is a fairly standard clause in franchise agreements, as it balances the franchisor's need for operational consistency with the franchisee's potential for facing unforeseen disruptions.