In a legal dispute regarding the Bonchon franchise agreement, who is responsible for covering the costs of experts' fees?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If we terminate this Agreement because of your default or you terminate same through failure to make payment following notice and opportunity to cure (pursuant to Section 17.04), you must pay us all losses and expenses we incur as a result of the default or termination, including all damages, costs, expenses, and reasonable attorneys' and experts' fees directly or indirectly related thereto, such as (without limitation) lost profits, lost opportunities, damage inuring to our Proprietary Marks and reputation, travel and personnel costs and the cost of securing a new Business at or proximate to the Restaurant Location (collectively, the "Damages").
This obligation will give rise to and remain, until paid in full, a lien in our favor against any and all of assets, property, furnishings, equipment, signs, fixtures and inventory owned by you or the franchised Business at the time of termination and against any of your money which we are holding or which is otherwise in our possession.
32.02 Attorneys' Fees – Third Party Actions
If we become a party to any action or proceeding commenced or instituted against us by a third party arising out of or relating to this Agreement, any and all related agreements, the franchised Business or your Bonchon Restaurant as a result of any claimed or actual act, error or omission of yours (and/or any of your officers, directors, shareholders, management, employees, contractors and/or representatives, (collectively, the "Franchisee Parties")), your Restaurant and/or the franchised Business by virtue of statutory, "vicarious", "principal/agent" or other liabilities asserted against or imposed on us as a result of our status as Franchisor; or if we become a party to any litigation or any insolvency proceeding involving you pursuant to any bankruptcy or insolvency code (including any
adversary proceedings in conjunction with bankruptcy or insolvency proceedings), then you will be liable to, and must promptly reimburse us for, the reasonable attorneys' fees, experts' fees, court costs, travel and lodging costs and all other expenses we incur in such action or proceeding regardless of whether such action or proceeding proceeds to judgment. In addition, we will be entitled to add all costs of collection, interest, attorneys' fees and experts' fees to our proof of claim in any insolvency or bankruptcy proceeding you file.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the responsibility for covering expert fees in legal disputes depends on the nature of the dispute and the party at fault. If Bonchon terminates the franchise agreement due to the franchisee's default, the franchisee is responsible for all losses and expenses Bonchon incurs, including damages, costs, and reasonable attorneys' and experts' fees. This extends to costs related directly or indirectly to the termination, such as lost profits and damage to Bonchon's brand reputation. This obligation is secured by a lien on the franchisee's assets.
Furthermore, if a third party initiates legal action against Bonchon due to the franchisee's actions or omissions related to the franchise, the franchisee must reimburse Bonchon for all expenses, including reasonable attorneys' fees, experts' fees, court costs, travel, and lodging costs. This applies regardless of whether the legal action proceeds to judgment. Bonchon is also entitled to add these costs to their proof of claim in any insolvency or bankruptcy proceeding the franchisee files.
In summary, a Bonchon franchisee may be responsible for covering expert fees if Bonchon terminates the agreement due to the franchisee's default or if a third-party action against Bonchon arises from the franchisee's actions. This allocation of responsibility is typical in franchise agreements, as it aims to protect the franchisor from liabilities caused by the franchisee's actions or breaches of contract.