Under what circumstances related to bankruptcy might the Bonchon Franchise Agreement's termination provision not be enforceable?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If any valid, applicable law or regulation of a competent governmental authority with jurisdiction over this Agreement or the parties to this Agreement limits our rights of termination under this Agreement or requires longer notice or cure periods than those set forth above, then this Agreement will be considered modified to conform to the minimum notice, cure periods or restrictions upon termination required by the laws and regulations. We will not, however, be precluded from contesting the validity, enforceability or application of the laws or regulations in any action, proceeding, hearing or dispute relating to this Agreement or the termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the franchise agreement's termination provisions may not be fully enforceable if they conflict with applicable laws or regulations. Specifically, Item 23, Section 15.06 states that if any law or regulation limits Bonchon's termination rights or requires longer notice or cure periods, the franchise agreement will be modified to conform to those minimum requirements. This ensures that franchisees are afforded the minimum protections required by law, even if the standard franchise agreement stipulates otherwise.
This provision is important for prospective Bonchon franchisees because it acknowledges that certain legal protections supersede the contract terms. For example, bankruptcy laws are designed to provide debtors with certain protections and opportunities for reorganization. If Bonchon's standard termination clauses related to bankruptcy conflict with these legal protections, the law will take precedence. This could mean that Bonchon might not be able to immediately terminate the agreement upon a franchisee's bankruptcy filing if the law requires a longer cure period or imposes other restrictions on termination.
However, the FDD also clarifies that Bonchon reserves the right to contest the validity, enforceability, or application of such laws or regulations in any legal proceeding. This means that while the franchise agreement will be modified to meet minimum legal requirements, Bonchon can still challenge those requirements in court. Therefore, franchisees should be aware that even if a law seems to protect them from immediate termination, Bonchon may still pursue legal action to argue for the enforcement of the original contract terms.
In summary, while Bonchon's franchise agreement includes provisions for termination upon events like insolvency or bankruptcy, these provisions are subject to modification based on applicable laws and regulations. Prospective franchisees should consult with legal counsel to understand their rights and protections under bankruptcy laws and how those laws interact with the termination clauses in the Bonchon franchise agreement. This will help them assess the risks and potential outcomes in the event of financial distress.