Under what circumstances can Bonchon require replacement guarantees from the franchisee?

According to Bonchon's 2025 Franchise Disclosure Document, if a proposed assignee of a Bonchon franchise is a business entity, Bonchon retains the right to require any owners or other parties with an interest in the proposed assignee or the location to execute a guarantee. This guarantee would be substantially in the form of Exhibit H of the Franchise Agreement. This condition applies when a franchisee seeks to assign their franchise to another party.

This requirement ensures that Bonchon has recourse against individuals with a vested interest in the franchise's success, even if the franchise is operated through a business entity. By requiring these individuals to execute a guarantee, Bonchon aims to secure their commitment to the franchise's obligations and performance. This is a fairly standard practice in franchising, as franchisors often seek to ensure that there are individuals who are personally liable for the franchise's performance, especially when dealing with business entities.

For a prospective Bonchon franchisee, this means that if they plan to operate their franchise through a business entity and later seek to assign it, Bonchon may require personal guarantees from the owners or interested parties of the assignee. This could impact the attractiveness of the franchise to potential assignees, as they may be hesitant to provide personal guarantees. Therefore, franchisees should carefully consider the implications of this requirement when structuring their business and planning for potential future assignments.