What action may Bonchon take if a franchisee does not maintain their trade accounts in a current fashion?

According to Bonchon's 2025 Franchise Disclosure Document, franchisees are required to maintain their trade accounts in a current status and promptly resolve any disputes with trade suppliers. If a franchisee fails to do so, Bonchon has the option to pay any or all of the franchisee's outstanding accounts, although they are not obligated to do so. If Bonchon does pay these accounts on behalf of the franchisee, the franchisee must immediately repay Bonchon as per Section 5.06 (E) of the agreement.

Failure to keep trade accounts current or to make immediate repayment to Bonchon constitutes a material breach of the Franchise Agreement. This gives Bonchon the right to terminate the agreement, provided they give the franchisee notice and an opportunity to correct the breach. This means that Bonchon must first inform the franchisee of the issue and allow them a period of time to bring their accounts up to date or resolve any disputes with suppliers.

This clause is significant for prospective franchisees as it highlights the importance of maintaining good relationships with suppliers and managing finances effectively. Failure to do so can not only lead to financial difficulties but also potentially result in the termination of the franchise agreement. Franchisees should ensure they have robust systems in place to manage their accounts and address any disputes promptly to avoid falling foul of this requirement.