What are the consequences if I do not comply with the covenant not to compete during the term of the Bonchon Franchise Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You do not comply with the covenant not to compete during the term of this Franchise Agreement; violate the restrictions pertaining to the use of Confidential Information contained in this Agreement; or, do not obtain the execution of the additional covenants required by this 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 fails to comply with the covenant not to compete during the term of the Franchise Agreement, it constitutes grounds for termination of the agreement. Specifically, it is listed as one of the conditions that allows Bonchon to terminate the agreement immediately with notice, without providing an opportunity for the franchisee to correct the breach.
This means that engaging in any competitive business activities, as defined in the agreement, during the term of the franchise can lead to immediate termination of the Bonchon franchise. The covenant not to compete restricts franchisees from directly or indirectly participating in any business that offers or sells Korean fried chicken or serves chicken as a primary menu item, defined as deriving 25% or more of gross revenues from chicken sales. This restriction applies to any geographic location during the term of the agreement.
For a prospective Bonchon franchisee, this underscores the importance of understanding and adhering to the non-compete clause. Violation can result in the loss of the franchise and the associated investment. Franchisees should seek legal counsel to fully understand the scope and limitations of the covenant not to compete to ensure compliance and avoid potential termination.