In the event of a Bonchon franchise termination, what condition must property sold to Bonchon be in regarding liens, debts, and other encumbrances?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
All property, real or personal, sold to us or our affiliate, nominee or designee (as applicable) under this Article 19 must be free and clear of all liens, debts, claims, liabilities, leases, encroachments, covenants, conditions, restrictions, rights, rights of way and/or other encumbrances (except for tax liens and special and/or other assessments not delinquent) unless we, in our reasonable opinion (or that of our affiliate, nominee or designee, as applicable), determine that the existence of same either will not interfere with the proposed use of the property or that the existence of same are merely due to easements of record, zoning ordinances or statutes, use and occupancy restrictions of public record or other limitations which are generally applicable to similar properties in close geographic proximity to the Restaurant Location.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, any property, whether real or personal, that a franchisee sells back to Bonchon (or its affiliates, nominees, or designees) must be free and clear of all liens, debts, claims, liabilities, leases, encroachments, covenants, conditions, restrictions, rights, rights of way, and other encumbrances. The only exceptions to this rule are for tax liens and special or other assessments that are not delinquent.
However, Bonchon does retain some discretion here. Bonchon (or its affiliate, nominee, or designee) can determine that the existence of certain encumbrances will not interfere with the proposed use of the property. This may include easements of record, zoning ordinances or statutes, use and occupancy restrictions of public record, or other limitations generally applicable to similar properties in close geographic proximity to the Restaurant Location.
This provision protects Bonchon from acquiring property with hidden financial or legal burdens that could complicate its future use or resale. For a franchisee, it means ensuring all obligations related to the property are settled before offering it for sale back to Bonchon. Failure to do so could delay or prevent the sale, potentially leading to further financial losses for the franchisee upon termination.