What representation and warranty must accompany the information submitted to Bonchon regarding a proposed assignment?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You expressly agree that your obligations to indemnify and hold harmless us and the other Indemnitees under Section 8.11 of this Agreement extends to and embraces liabilities arising from or relating to, directly or indirectly, any statements, representations or warranties that you may give to or receive from any proposed assignee and/or any claim that you (and, if you are a business entity, your owners, Operating Principal, General Manager, management or employees) or your assignee engaged in fraud, deceit, violation of franchise laws or other illegality in connection with the negotiation or consummation of the assignment. As with all other indemnification obligations set forth in this Agreement, this specific indemnification obligation will survive the termination or expiration of this Agreement.
You further understand and agree that our approval of any assignment transaction will not constitute our waiver of any claims against you by us or our affiliates, under this Agreement or otherwise.
You further understand and agree that our consent to an assignment of this Agreement and the Restaurant, or any interest in you or your owners, is not a representation of the fairness of the terms of any contract between you and the assignee, a guarantee of the Restaurant's or assignee's prospects of success, or a waiver of any claims we have against you (or your owners) or of our right to demand the assignee's full compliance with this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee provides any statements, representations, or warranties to a proposed assignee during the assignment of the franchise, the franchisee is obligated to indemnify Bonchon against any liabilities arising from those statements. This means that if the assignee makes a claim against Bonchon based on what the franchisee told them, the franchisee is responsible for covering Bonchon's losses. This obligation extends to liabilities arising from any claims of fraud, deceit, or violation of franchise laws related to the assignment negotiation or completion.
This indemnification requirement is a significant point for Bonchon franchisees looking to sell their business. It means they need to be extremely careful about the information they provide to potential buyers. Any misrepresentation, even unintentional, could lead to financial liability for the franchisee if the assignee later makes a claim against Bonchon. This obligation survives even after the termination or expiration of the Franchise Agreement.
Bonchon's approval of an assignment does not constitute a waiver of any claims Bonchon may have against the franchisee. Furthermore, Bonchon's consent to the assignment does not represent a guarantee of the fairness of the terms between the franchisee and assignee, nor does it guarantee the success of the restaurant or the assignee. It also does not waive Bonchon's right to demand full compliance with the agreement from the assignee. This reinforces that Bonchon is not responsible for the franchisee's dealings with the assignee and that the franchisee remains liable for their representations.
In essence, Bonchon places the responsibility for the accuracy and legality of information shared during the assignment process squarely on the shoulders of the franchisee. This is a common practice in franchising, as franchisors want to protect themselves from disputes arising from the transfer of ownership. Franchisees should seek legal counsel to ensure they understand their obligations and avoid potential liabilities when selling their Bonchon franchise.