Does Bonchon represent that the required or obtained insurance will cover all insurable risks related to the franchised business?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Nothing in this Agreement may be considered our undertaking or representation that the insurance that you are required to obtain or that we may obtain for you will insure you against any or all insurable risks of loss which may arise out of or in connection with the operation of the franchised Business. We advise you to consult with your insurance agent and other risk advisors regarding any types, amounts or elements of insurance coverage beyond those specified herein which may be prudent to obtain.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon does not represent or undertake that the required or obtained insurance will cover all insurable risks of loss that may arise from the franchised business. Bonchon advises franchisees to consult with their insurance agent and other risk advisors regarding additional insurance coverage beyond what is specified in the agreement.
Bonchon does outline the required insurance coverage that franchisees must obtain and maintain at their own expense. This includes broad form comprehensive general liability coverage and broad form contractual liability coverage of at least $2,000,000 aggregate and at least $1,000,000 per occurrence, with a deductible or self-insured retention not exceeding $5,000. Franchisees also need special cause of loss coverage, sometimes called "All Risk Coverage", on their Bonchon Restaurant and all fixtures, equipment, supplies, and other property used in the operation of the Restaurant, for full repair and replacement value of the machinery, equipment and improvements, including full coverage for loss of income resulting from damage to the Restaurant.
Additional insurance requirements include Dram Shop Liquor Liability Insurance with limits not less than $1,000,000 per occurrence and in the aggregate, business interruption insurance to cover rental expenses, personnel maintenance, and fixed expenses (including royalty payments) for a minimum of 12 months of lost income. If a vehicle is used, automobile liability insurance with a combined single limit of $1,000,000 is required. Finally, franchisees must have Workers Compensation Insurance providing Statutory Benefits, as required by applicable state law, and Employer's Liability Insurance with specific limits for bodily injury.
Bonchon retains the option to procure insurance on behalf of the franchisee if the franchisee fails to maintain the required coverage, but is not obligated to do so. If Bonchon does obtain insurance on the franchisee's behalf, the franchisee must promptly pay or reimburse Bonchon for the premiums and a reasonable fee for obtaining the insurance. Franchisees must provide certificates of insurance to Bonchon no later than ten days before commencing operations and at least five days after each policy expiration/renewal date.