Under what conditions can a Bonchon franchisee pledge or encumber their franchised business assets?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Rights**
Our consent to any sale, transfer or assignment under this Article 14 shall not constitute a waiver of any claims we may have against you, your franchised Business, any of your owners and/or any Guarantor, nor shall our consent be deemed a waiver of our right to require exact compliance with any of the terms of this Agreement by any assignee.
14.11 No Encumbrance
You will have no right to pledge, encumber, mortgage, hypothecate or otherwise give any third party a security interest in this Agreement, the franchised Business or your Bonchon Restaurant in any manner without our prior written permission, which we may withhold for any reason.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee's ability to pledge or encumber their franchised business assets is restricted. Specifically, a Bonchon franchisee cannot pledge, encumber, mortgage, hypothecate, or give any third party a security interest in the Franchise Agreement, the Bonchon business, or the Bonchon restaurant without prior written permission from Bonchon.
This restriction extends to the franchisee's business entity shares, equity interests, or other ownership interests. The franchisee must obtain Bonchon's prior written consent before permitting any mortgage, lien, pledge, or other security interest in these assets. Bonchon retains the right to withhold this consent for any reason.
Failure to comply with these restrictions gives Bonchon the right to terminate the Franchise Agreement immediately upon notice. This provision underscores Bonchon's control over the financial dealings of its franchisees and its interest in protecting the brand and system from potential financial instability or third-party interference.