If Bonchon accepts the assignment, what representations and warranties is Bonchon entitled to from the seller?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You expressly agree that your obligations to indemnify and hold harmless us and the other Indemnitees under Section 8.11 of this Agreement extends to and embraces liabilities arising from or relating to, directly or indirectly, any statements, representations or warranties that you may give to or receive from any proposed assignee and/or any claim that you (and, if you are a business entity, your owners, Operating Principal, General Manager, management or employees) or your assignee engaged in fraud, deceit, violation of franchise laws or other illegality in connection with the negotiation or consummation of the assignment. As with all other indemnification obligations set forth in this Agreement, this specific indemnification obligation will survive the termination or expiration of this Agreement.
You further understand and agree that our approval of any assignment transaction will not constitute our waiver of any claims against you by us or our affiliates, under this Agreement or otherwise.
You further understand and agree that our consent to an assignment of this Agreement and the Restaurant, or any interest in you or your owners, is not a representation of the fairness of the terms of any contract between you and the assignee, a guarantee of the Restaurant's or assignee's prospects of success, or a waiver of any claims we have against you (or your owners) or of our right to demand the assignee's full compliance with this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if Bonchon consents to the assignment of the Franchise Agreement, the seller (franchisee) may give representations or warranties to the buyer (assignee). The franchisee is obligated to indemnify Bonchon against any liabilities arising from those statements, representations, or warranties. This includes any claims that the franchisee or their assignee engaged in fraud, deceit, violation of franchise laws, or other illegal activities during the assignment negotiation or completion. This indemnification obligation survives the termination or expiration of the Franchise Agreement.
Bonchon's approval of the assignment does not constitute a waiver of any claims Bonchon may have against the franchisee. Additionally, Bonchon's consent to the assignment does not represent that Bonchon believes the terms of the contract between the franchisee and the assignee are fair. It also does not guarantee the Restaurant's or the assignee's success, nor does it waive Bonchon's right to demand full compliance with the Franchise Agreement from the assignee.
In practical terms, this means that if a Bonchon franchisee sells their franchise, they remain liable to Bonchon for any misrepresentations they make to the buyer during the sale. Bonchon is protected from any legal issues that may arise from the sale process between the franchisee and the new owner. This ensures that Bonchon can pursue the former franchisee if the new franchisee makes claims against Bonchon based on the former franchisee's statements during the assignment.