For Bonchon franchisees, can the insurance coverage contain provisions that limit or reduce coverage if there is a claim by one or more of the Indemnitees?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. The insurance coverage that you acquire and maintain under this Article 9 must:
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- Name us and the other Indemnitees identified in Section 8.11 as additional insureds and provide that the coverage afforded applies separately to each insured against whom a claim is brought as though a separate policy had been issued to each insured (except for workers' compensation, employer's liability and any other employee-related insurance mandated by any federal, state or local law, rule or regulation).
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- Contain no provision which in any way limits or reduces coverage for you if there is a claim by one or more of the Indemnitees.
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- Extend to and provide indemnity for all obligations assumed by you under this Agreement and all other items for which you are required to indemnify us under this Agreement.
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- Contains such endorsements as we may specify from time to time in the Manuals or otherwise.
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- Be primary to and without right of contribution from any other insurance purchased by the Indemnitees.
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- May not otherwise limit coverage for tort liabilities assumed in this Agreement.
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- Provide, by endorsement, that we are entitled to receive at least 30 days prior written notice of any intent to reduce policy limits, restrict coverage, modify, cancel, not renew or otherwise alter or amend the policy.
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Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the insurance coverage that franchisees are required to acquire and maintain cannot contain any provision that limits or reduces coverage for the franchisee if there is a claim by one or more of the Indemnitees. Indemnitees include Bonchon and its affiliates, subsidiaries, successors, assigns, designees, officers, directors, managers, employees, agents, attorneys, shareholders, owners, members, and representatives.
This requirement ensures that Bonchon and other Indemnitees are fully protected under the franchisee's insurance policies without any limitations or reductions in coverage due to claims made by these Indemnitees. The insurance coverage must apply separately to each insured party against whom a claim is brought, as if a separate policy had been issued to each, with exceptions for workers' compensation, employer's liability, and other employee-related insurance mandated by law.
This provision is designed to protect Bonchon from potential liabilities arising from the franchisee's operations. It also stipulates that the franchisee's insurance must extend to and provide indemnity for all obligations assumed by the franchisee under the Franchise Agreement, as well as all other items for which the franchisee is required to indemnify Bonchon. The policy must also be primary and without right of contribution from any other insurance purchased by the Indemnitees, and it cannot otherwise limit coverage for tort liabilities assumed in the agreement. Bonchon also requires at least 30 days' prior written notice of any intent to reduce policy limits, restrict coverage, modify, cancel, not renew, or otherwise alter or amend the policy.
For a prospective Bonchon franchisee, this means they must ensure that their insurance policies meet these specific requirements to avoid being in breach of the Franchise Agreement. Failure to maintain the required insurance coverage can result in the termination of the agreement. Franchisees should carefully review their insurance policies with their insurance provider to confirm compliance with these stipulations and provide Bonchon with the necessary certificates of insurance as evidence of coverage.