If a Bonchon franchisee attempts to assign their interest in the franchise, are they required to indemnify Bonchon for liabilities arising from that attempt?
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, a franchisee's obligation to indemnify Bonchon extends to liabilities arising from statements, representations, or warranties made to a proposed assignee. This also includes any claims of fraud, deceit, or violation of franchise laws related to the assignment negotiation or completion. This indemnification obligation survives the termination or expiration of the Franchise Agreement. Therefore, a Bonchon franchisee is required to indemnify Bonchon for liabilities arising from their attempt to assign their interest in the franchise.
This means that if a franchisee provides inaccurate or misleading information to a potential buyer during the assignment process, or if there are claims of illegal activity related to the assignment, the franchisee is responsible for protecting Bonchon from any resulting legal or financial repercussions. This includes covering legal costs, settlements, and other related expenses. This requirement is in addition to the general indemnification obligations outlined in the agreement.
Bonchon's approval of an assignment does not waive any claims Bonchon may have against the franchisee or guarantee the assignee's success. The franchisee remains liable for obligations arising before the assignment's effective date, including the indemnification obligation. This ensures that Bonchon is protected from potential liabilities even after the franchise has been transferred to a new owner. The franchisee must also execute any documents Bonchon reasonably requests to evidence this liability.
This provision highlights the importance of franchisees being truthful and compliant with all laws and regulations during the assignment process. It also underscores the need for franchisees to understand their ongoing responsibilities even after they have transferred their franchise to a new owner. Franchisees should seek legal counsel to fully understand their indemnification obligations and the potential risks associated with assigning their franchise.