For how many months of lost income must Bonchon franchisees maintain Business Interruption Insurance to cover rental expenses, personnel, and royalties?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You must purchase and maintain the following required insurance from insurance providers that meet our criteria as stated in our Manuals.
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- Business Interruption Insurance in sufficient amounts to cover your Bonchon Restaurant rental expenses, maintenance of competent personnel and other fixed expenses (including payment of Continuing Royalties to us) for a minimum 12 months' loss of income;
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–42)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are required to maintain Business Interruption Insurance in sufficient amounts to cover rental expenses, personnel costs, and royalty payments to Bonchon for a minimum of 12 months of lost income. This insurance coverage is intended to protect the franchisee from financial losses that may occur if the restaurant is temporarily unable to operate due to unforeseen circumstances such as damage to the property.
This requirement ensures that Bonchon franchisees have a financial safety net to cover ongoing expenses during periods of business interruption. By maintaining this insurance, franchisees can continue to meet their financial obligations, including rent, employee wages, and royalty payments to Bonchon, even when the restaurant is not generating revenue. This can be particularly important for new franchisees who may have limited financial reserves.
The specific amount of Business Interruption Insurance required will depend on the individual franchisee's circumstances, including the restaurant's location, size, and operating expenses. Franchisees should work with their insurance provider to determine the appropriate coverage level to meet the 12-month minimum requirement. It is important to note that the insurance must cover not only rental expenses and personnel costs but also the continuing royalty payments owed to Bonchon, which distinguishes it from some other franchise systems that may not include royalty coverage in their business interruption requirements.
Bonchon franchisees must secure this insurance from providers that meet Bonchon's criteria, as outlined in their manuals. This suggests that Bonchon has specific standards for the insurance providers they deem acceptable, ensuring that franchisees obtain coverage from reputable and reliable sources. Franchisees should carefully review Bonchon's manuals and consult with approved insurance providers to ensure they meet all the necessary requirements.