Who pays for the investigation conducted by Bonchon regarding a proposed assignee of a Bonchon franchise?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not sell or otherwise assign or transfer all or any interest in you (if you are a business entity), the franchise conferred by this Agreement, your franchised Business, your Bonchon Restaurant, your right to use the Bonchon System, Proprietary Marks, Confidential Information and/or Manuals, or any interest in any of these, to a third party without our prior written consent. If we do not elect to exercise our right of first refusal (as provided in Section 14.06 below), which right shall not apply in the event that the assignee is a member of your immediate family, then we will not unreasonably withhold consent to the assignment and sale. You agree that it will not be unreasonable for us to impose, among other requirements, the following conditions to granting consent to the proposed assignment and sale:
- A. That the proposed assignee (meaning all individuals and entities which, after the proposed sale, transfer or assignment, will be franchisees under this Agreement or under any successor agreement) applies to us for acceptance as a franchisee, and furnishes to us the information and references that we request to determine the proposed assignee's skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating and ability to assume your duties and obligations under this Agreement and any related agreement. You must pay the costs of any such investigation conducted by us.
- B. That the proposed assignee (or, if an entity, each and every owner or guarantor of the proposed assignee) presents itself for a personal interview at our corporate office, or any other location we designate, at the date and time we reasonably request, without expense to us. We may determine to meet with your proposed assignee at his, her or its principal
- place of business or residence and, if we do, you will reimburse us for all travel, lodging, meal and personal expenses related to such meeting.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee wishes to sell or transfer their Bonchon franchise to a third party, the franchisee is responsible for covering the costs of any investigation that Bonchon conducts on the proposed assignee. This investigation is to help Bonchon determine whether the proposed assignee possesses the skills, qualifications, financial condition, background, history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and overall ability to fulfill the obligations of the franchise agreement.
Furthermore, if Bonchon decides to meet with the proposed assignee at their place of business or residence, the franchisee must reimburse Bonchon for all travel, lodging, meal, and personal expenses related to the meeting. This financial responsibility extends to covering Bonchon's expenses, ensuring that the franchisor does not bear the financial burden of assessing a potential new franchisee.
This requirement highlights the importance of a franchisee carefully vetting potential assignees before formally proposing them to Bonchon. Since the franchisee will bear the costs of Bonchon's investigation, presenting a well-qualified candidate can help minimize these expenses and increase the likelihood of a smooth and cost-effective transfer process. Franchisees should factor these potential costs into their financial planning when considering selling their franchise.