What representation does a Bonchon franchisee make regarding material liabilities as of the date of execution of the Franchise Agreement?

According to Bonchon's 2025 Franchise Disclosure Document, a franchisee represents that they do not have any material liabilities, adverse claims, commitments, or obligations of any nature as of the date of execution of the Franchise Agreement. This includes liabilities that are accrued, unliquidated, absolute, or contingent, which are not already reflected as liabilities on the balance sheets of the franchisee's current financial statements furnished to Bonchon before the agreement's execution.

This representation is significant because it assures Bonchon that the franchisee is entering the agreement in good financial standing and is not concealing any existing financial burdens that could impair their ability to fulfill the franchise obligations. The representation covers a broad range of potential liabilities, ensuring that all possible financial risks are disclosed.

Prospective Bonchon franchisees should carefully review their financial statements and disclose any potential liabilities to Bonchon before signing the Franchise Agreement. Failure to do so could result in a breach of contract if undisclosed liabilities later come to light. This requirement aligns with standard franchising practices, where franchisors seek to ensure the financial stability of their franchisees to protect the brand and the network's overall performance.