What is the impact of the independent contractor relationship on tax obligations for a Bonchon franchisee?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You understand and agree that you are and will be our independent contractor under this Agreement. Nothing in this Agreement may be construed to create a partnership, joint venture, agency, employment or fiduciary relationship of any kind. None of your employees will be considered to be our employees. Neither you nor any of your employees whose compensation you pay may in any way, directly or indirectly, expressly or by implication, be construed to be our employee for any purpose, most particularly with respect to any mandated or other insurance coverage, tax or contributions, or requirements pertaining to withholdings, levied or fixed by any city, state or federal governmental agency. We will not have the power to hire or fire your employees. You must communicate to all employees that you, not us, are their employer; and you must ensure that no payroll checks or other employment-related documents (such as job applications and W-2s) contain or reference the Marks or our name. Each of the parties will file its own tax, regulatory, and payroll reports with respect to its respective employees and operations, saving and indemnifying the other party hereto of and from any liability of any nature whatsoever by virtue thereof. You expressly agree,
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the franchise agreement specifies that the franchisee operates as an independent contractor. This distinction has significant implications for tax obligations. Bonchon franchisees are responsible for filing their own tax, regulatory, and payroll reports related to their employees and business operations. Bonchon will not be held liable for any obligations related to the franchisee's employees or operations. This arrangement means that Bonchon franchisees must handle all aspects of employment, including wage payments, benefits, training, and adherence to labor laws.
As an independent contractor, a Bonchon franchisee is responsible for all employment-related decisions and costs, including withholding and remitting payroll taxes, providing mandated insurance coverage, and managing contributions. Bonchon explicitly states that neither the franchisee nor their employees should be construed as employees of Bonchon for any purpose, especially concerning insurance, taxes, or withholdings. This clarifies that Bonchon will not handle these responsibilities on behalf of the franchisee.
This independent contractor relationship also means that Bonchon franchisees must ensure that all employees are aware that the franchisee, not Bonchon, is their employer. Franchisees must also ensure that payroll checks and other employment-related documents do not reference Bonchon's name or trademarks. By structuring the relationship this way, Bonchon aims to avoid any potential legal or financial liabilities associated with the franchisee's employees and business operations, placing the onus entirely on the franchisee. Franchisees should consult with legal and tax professionals to fully understand their obligations under this arrangement.