When submitting information about a proposed assignee to Bonchon, what representation and warranty must the seller provide?
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 seeks to assign their franchise agreement and/or franchised business, they must understand that they are obligated to indemnify Bonchon and its related parties. This indemnification extends to any liabilities arising from statements, representations, or warranties made to the proposed assignee. It also covers any claims of fraud, deceit, or violation of franchise laws in connection with the assignment's negotiation or completion. This indemnification obligation survives the termination or expiration of the Franchise Agreement.
This means that as a Bonchon franchisee, you are responsible for the accuracy and legality of all information provided to a potential buyer of your franchise. If the buyer later makes a claim against Bonchon based on misrepresentations you made during the sale, you could be held liable for Bonchon's losses. This is a significant risk to consider when selling your franchise.
Bonchon's approval of any assignment does not constitute a waiver of any claims against the franchisee or a guarantee of the fairness of the terms between the franchisee and the assignee. It also does not guarantee the Restaurant's or assignee's prospects of success, or a waiver of any claims Bonchon has against the franchisee (or their owners) or of Bonchon's right to demand the assignee's full compliance with the Franchise Agreement. This reinforces that Bonchon is not responsible for the outcome of the sale or the assignee's performance; their approval is simply permission to transfer the franchise, provided all conditions are met.
In summary, a Bonchon franchisee must be diligent in ensuring the accuracy and completeness of all information provided to a potential assignee and should seek legal counsel to ensure compliance with all applicable laws and regulations regarding franchise sales. The franchisee remains liable for any misrepresentations or illegal activities related to the assignment, even after the sale is complete.