What clause regarding the Bonchon Franchise Agreement must be included in the organizational documents of a franchisee's business entity?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. 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 Business pursuant to one or more franchise agreements from us and that your activities will be exclusively confined to such purpose. Your organizational documents will also include a "Supremacy of Franchise 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 Agreement, the parties hereto agree that the provisions of such Franchise 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 Franchise Agreement."
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee operates their Bonchon business through a separate business entity, the organizational documents of that entity must include specific clauses related to the Franchise Agreement. These documents, which include partnership agreements, incorporation documents, bylaws, and operating agreements, must state that the issuance or transfer of any interest in the entity is restricted by the terms of the Bonchon Franchise Agreement.
Furthermore, the organizational documents must specify that the sole purpose of the entity is to conduct a franchised Bonchon business under the franchise agreement, and its activities must be exclusively confined to this purpose. This ensures that the entity cannot engage in activities outside the scope of the Bonchon franchise without violating the agreement.
In addition to these stipulations, the organizational documents must include a "Supremacy of Franchise Agreement" clause. This clause explicitly states that if any provision within the organizational documents conflicts with the Bonchon Franchise Agreement, the terms of the Franchise Agreement will take precedence. The parties involved are then obligated to amend the organizational documents to align with the Franchise Agreement, ensuring consistency and compliance with Bonchon's requirements.