What clause regarding the Area Development Agreement's precedence must be included in my business entity's organizational documents as a Bonchon Area Developer?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- All of your business entity's organizational documents (including any partnership, partnership agreements, incorporation documents, organization/formation documents, bylaws, operating agreements, shareholders agreements, buy/sell or equivalent agreements, and trust instruments) will recite that the issuance or transfer of any interest in you is restricted by the terms of this Agreement, and that the sole purpose for which you are formed (and the sole activity in which you are or will be engaged) is the conduct of a franchised Bonchon Business(es) pursuant to one or more area development and/or franchise agreements from us and that your activities will be
exclusively confined to such purpose. Your organizational documents will also include a "Supremacy of Area Development Agreement" clause reciting the following:
"To the extent any provision of this Agreement conflicts, violates or is inconsistent with any provision of the Bonchon Franchise LLC Area Development Agreement, the parties hereto agree that the provisions of such Area Development Agreement shall supersede the same and that the parties hereto shall enter into such amendments to this agreement as are necessary in order to make the relevant provisions consistent with or non-violative of the provisions of the Bonchon Franchise LLC Area Development Agreement."
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if you operate your Bonchon area development business through a business entity, your organizational documents must include a "Supremacy of Area Development Agreement" clause. This clause ensures that the Area Development Agreement takes precedence over any conflicting provisions in your business entity's organizational documents.
Specifically, the clause must state that if any provision within your business entity's documents conflicts with the Bonchon Area Development Agreement, the terms of the Area Development Agreement will supersede the conflicting provision. Furthermore, the clause requires that you amend your business entity's documents as necessary to align with the Area Development Agreement.
This requirement protects Bonchon's interests by ensuring the franchise agreement remains the governing document. It prevents franchisees from using their own business structures to circumvent the obligations and standards set forth in the Area Development Agreement. Prospective franchisees should carefully review this clause and understand its implications for the governance and operation of their Bonchon business through a business entity.