Under what circumstances is a Bonchon franchisee required to reimburse Bonchon for attorneys' fees related to third-party actions?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
ng records, or otherwise to comply with this Agreement, you agree, whether or not we initiate a formal legal proceeding, to reimburse us for all of the costs and expenses that we incur, including, without limitation, reasonable accounting, attorneys' and related fees, and any fees and costs incurred in connection with collection of any amounts due and obtaining injunctive or other relief for the enforcement of any provisions of this Agreement.
32.02 Attorneys' Fees – Third Party Actions
If we become a party to any action or proceeding commenced or instituted against us by a third party arising out of or relating to this Agreement, any and all related agreements, the franchised Business or your Bonchon Restaurant as a result of any claimed or actual act, error or omission of yours (and/or any of your officers, directors, shareholders, management, employees, contractors and/or representatives, (collectively, the "Franchisee Parties")), your Restaurant and/or the franchised Business by virtue of statutory, "vicarious", "principal/agent" or other liabilities asserted against or imposed on us as a result of our status as Franchisor;
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Bonchon for legal fees in certain situations involving third-party actions. Specifically, if a third party initiates legal action against Bonchon due to the franchisee's actions, errors, or omissions related to the franchise agreement, the franchised business, or the Bonchon Restaurant, the franchisee is liable for Bonchon's associated expenses. This includes scenarios where Bonchon is held liable due to its status as the franchisor under statutory, vicarious, or principal/agent liabilities.
This obligation extends to covering Bonchon's reasonable attorneys' fees, experts' fees, court costs, travel and lodging costs, and all other expenses incurred during the action or proceeding. The franchisee is responsible for these costs regardless of the outcome of the legal action. Furthermore, if the franchisee becomes involved in any litigation or insolvency proceeding, including bankruptcy, they are also responsible for reimbursing Bonchon's related expenses.
This requirement places a significant financial burden on Bonchon franchisees, as they could be responsible for substantial legal costs even if they are not directly at fault in the third-party action. It also allows Bonchon to add all costs of collection, interest, attorneys' fees, and experts' fees to their proof of claim in any insolvency or bankruptcy proceeding the franchisee files. Prospective franchisees should carefully consider this potential liability and seek legal counsel to fully understand the implications.