What conditions must be met for Bonchon to assign the Area Development Agreement to another party?

According to Bonchon's 2025 Franchise Disclosure Document, the transfer of the Area Development Agreement by the franchisee requires Bonchon's approval. Specifically, Item 17 references Sections 12.02, 12.03 and 12.04 of the Area Development Agreement, stating that no transfer is allowed without Bonchon's consent. However, there is an exception for transfers to a business entity formed by the franchisee for convenience. These transfer provisions are subject to state law, which may impose additional requirements or limitations.

This means that if a Bonchon area developer wants to sell or assign their rights to a third party, they must first obtain Bonchon's permission. Bonchon likely has the right to review the proposed transferee's qualifications, financial capabilities, and business experience to ensure they meet Bonchon's standards. This protects Bonchon's brand and the interests of other franchisees.

The exception for transfers to a business entity formed for convenience provides some flexibility for the franchisee. For example, a franchisee operating as an individual may want to incorporate their business for liability or tax reasons. In this case, Bonchon may not require the same level of scrutiny as a transfer to an unrelated third party. However, the specific conditions and requirements for such a transfer would be detailed in Sections 12.02, 12.03 and 12.04 of the Area Development Agreement.

It is important for a prospective Bonchon area developer to carefully review these sections of the Area Development Agreement to understand the specific conditions and procedures for transferring the agreement. They should also consult with an attorney to understand how state law may affect these provisions.