Does the Bonchon franchise agreement cover claims advanced against Bonchon franchisees by their own officers, directors, shareholders, partners, or employees?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
proved by us; defects in any Bonchon Restaurant you construct and/or operate, whether or not discoverable by you or by us; all acts, errors, neglects or omissions of you or the franchised Business and/or the owners, officers, directors,
management, employees, agents, servants, contractors, partners, proprietors, affiliates or representatives of you and/or the franchised Business and/or Restaurant (or any third party acting on your behalf or at your direction), whether in connection with the franchised Business, the Restaurant or otherwise, including (without limitation) any property damage, injury or death suffered or caused by any vehicle serving your franchised Business; any claim, however and wherever asserted, that we or our affiliates are the employer, joint employer or co-employer of you and/or your employees (including, without limitation, any claims against us for your violation of any federal, local or state labor and/or wage and hour laws, rules or regulations); third party claims against us arising from or related to your breach of the terms, restrictions and requirements of this Agreement (including, without limitation, your unauthorized use of the Proprietary Marks, violation of any applicable laws, codes, rules or regulations or failure to comply with Privacy Laws); your violation of Privacy Laws; all activities, conduct and representations which you may engage in connected to any actual or attempted assignment (as defined in Section 14.02) of any interest whatsoever in you or the franchised Restaurant or Business (or any entity which controls (as defined in Section 14.02) you or the franchised Restaurant or Business);all liabilities arising from or related to your offer and/or sale of products and/or services as contemplated by this Agreement; and, any action by any customer of yours or visitor to your Bonchon Restaurant or any other facility of your franchised Business (collectively, an "Indemnification Claim").
As used above, the phrase "claims, losses, liabilities and costs" includes all claims; causes of action; fines; penalties; liabilities; losses; compensatory, exemplary, statutory or punitive damages or liabilities; costs of investigation; lost profits; court costs and expenses; reasonable attorneys' and experts' fees and disbursements; settlement amounts; judgments; compensation for damage to our reputation and goodwill; costs of or resulting from delays; travel, food, lodging and other living expenses necessitated by the need or desire to appear before (or witness the proceedings of) courts or tribunals (including arbitration tribunals), or government or quasi-governmental entities (including those incurred by Indemnitees' attorneys and/or experts); all expenses of recall, refunds, compensation and public notices;
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the franchise agreement addresses scenarios where claims are brought against Bonchon due to the actions or relationships of the franchisee, including their officers, directors, shareholders, partners, or employees. Specifically, Bonchon requires franchisees to indemnify and defend Bonchon against claims arising from the franchisee's operations, conduct, or breaches of the agreement. This includes claims that Bonchon or its affiliates are the employer or co-employer of the franchisee's employees, and claims resulting from the actions of the franchisee's officers, directors, shareholders, management, employees, contractors, and representatives.
This means a Bonchon franchisee could be responsible for covering Bonchon's legal costs and any damages awarded if a third party, including the franchisee's own personnel, brings a claim against Bonchon related to the franchisee's business. This indemnification extends to a wide range of potential issues, such as property damage, injury, violations of labor laws, or breaches of the franchise agreement. The franchisee is also responsible for reimbursing Bonchon for attorney's fees and expenses if Bonchon becomes involved in litigation due to the franchisee's actions or those of their personnel.
This type of indemnification clause is common in franchise agreements, as it aims to protect the franchisor from liabilities arising from the franchisee's independent operation of their business. However, it also places a significant responsibility on the franchisee to ensure compliance with all applicable laws and regulations, and to manage their business in a way that minimizes the risk of claims against Bonchon. A prospective franchisee should carefully review the indemnification provisions in the franchise agreement and understand the potential financial implications of these clauses.
Furthermore, the franchisee must acknowledge that Bonchon's certification of certain employees does not give Bonchon the power to control those employees. The franchisee retains control over the daily operations of the franchised business and must adhere to Bonchon's system standards. The franchisee cannot obligate Bonchon for any expenses or liabilities unless specifically provided in the agreement, and Bonchon is not liable for any unauthorized agreements or representations made by the franchisee.