What is considered a failure to meet System requirements for a Bonchon franchise, and what is the franchisee obligated to do in such a case?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Your franchised Business and the Bonchon Restaurant it operates must comply at all times with every provision of this Agreement, the Bonchon System, the Manuals and any Supplements to the Manuals. You may not use the Bonchon System or the Proprietary Marks for the benefit of any business other than the franchised Business. You may not conduct (or permit anyone else to conduct) any business at your Bonchon Restaurant other than the franchised Business embraced by this Agreement without first obtaining our written consent, which we may withhold for any reason or no reason. You acknowledge, understand and agree that your strict compliance with the System, this Agreement and the Manuals are of the essence to this Agreement and are critically important to you, us and all other franchisees, since your failure to adhere to the System, this Agreement, the Manuals and any Supplements to the Manuals may damage the reputation and goodwill enjoyed by
the Bonchon network and the Proprietary Marks.
You make a willful misrepresentation or do not make a material disclosure required by any governmental authority regarding any matter involving or affecting your obligations under this Agreement or the operations of the Bonchon Businesses.
You interfere or attempt to interfere in any manner with our or our affiliates' contractual relations and/or our relationships with other franchisees; any supplier of you, us or other franchisees; any governmental or quasi-governmental authority; our employees or advertising agencies; or, any third parties.
You commit any act or default which materially impairs the goodwill associated with our Proprietary Marks and which, by its nature, is incurable; or, if the default is curable, you fail to cure the default following delivery of written notice to cure at least seventytwo hours in advance.
You do not comply, for a period of fifteen (15) days after notification of non-compliance by us or any governmental or quasi-governmental authority, with any federal, state or local law or regulation applicable to the operation of the franchised Business.
You repeatedly fail to comply with one or more requirements of this Agreement, whether or not corrected after notice.
You, your Area Manager, or any of your District Managers violate any law, rule or regulation, and/or engages in any act or practice, which subjects you and/or us to widespread publicity, ridicule or derision.
You use or duplicate any aspect of our System, services, programs or products in an unauthorized fashion.
You engage in any business or market any service or product under a name or mark which, in our opinion, is confusingly similar to our Proprietary Marks.
You engage in conduct which reflects materially and unfavorably upon the operation and reputation of the Bonchon Businesses, us or the Bonchon System.
You or any of your owners' assets, property, or interests are blocked under any law, ordinance, or regulation relating to terrorist activities, or you or any of your owners otherwise violate any such law, ordinance, or regulation.
Except as provided in Section 17.01 below ("Unavoidable Delay or Failure to Perform (Force Majeure)"), if you fail to adhere to the Development Schedule in Section 6.01 by either: (1) failing to execute the Franchise Agreement for each Bonchon Business on or before the Due Date of Execution of the Lease specified above, or (2) failing to commence operations of each Bonchon Business on or before the applicable Commencement of Operations Date specified above, then this will constitute a material breach of this Agreement, which, unless you cure it as provided in Section 15.03 of this Agreement, will result in this Agreement being terminated immediately.
Termination of this Agreement for this reason will not be a termination (constructive or otherwise) of any Franchise Agreement(s) entered into by you and us under which you have already commenced the operation of the Bonchon Businesses covered by the Franchise Agreement(s) if you have fully performed and otherwise been in compliance with all of your obligations under the Franchise Agreement(s) in question. You will lose both the right to develop the undeveloped Bonchon Businesses in the Development Territory and the Area Development Fee attributable to the undeveloped Bonchon Businesses, and we may operate or franchise Bonchon Businesses anywhere within the Development Territory without in any way being in violation of this Agreement. This remedy of ours will be in addition to whatever other remedies we may have at law or in equity.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to the 2025 Bonchon Franchise Disclosure Document, several actions or omissions can be considered a failure to meet System requirements. These include making misrepresentations to governmental authorities, interfering with Bonchon's relationships with suppliers or other franchisees, or any action that impairs the goodwill associated with Bonchon's trademarks. Failure to comply with federal, state, or local laws, repeated non-compliance with the Franchise Agreement, or unauthorized use of Bonchon's System also constitute failures. Engaging in conduct that reflects unfavorably on Bonchon or violating laws related to terrorist activities are also grounds for failure.
If a Bonchon franchisee fails to meet System requirements, the consequences vary depending on the nature of the failure. In some cases, such as non-compliance with laws, the franchisee has a period of fifteen days after notification to correct the issue. For defaults that are curable and impair the goodwill of Bonchon's Proprietary Marks, the franchisee must cure the default within seventy-two hours of written notice. Repeated failures to comply with the agreement, even if corrected after notice, can also be considered a breach.
Failure to adhere to the Development Schedule, such as not executing franchise agreements or commencing operations by specified dates, constitutes a material breach of the Area Development Agreement, potentially leading to immediate termination if not cured. In such cases, the franchisee may lose the rights to develop further Bonchon Businesses in the Development Territory and forfeit the associated Area Development Fee. Bonchon retains the right to operate or franchise Bonchon Businesses within the territory without violating the agreement.
Bonchon emphasizes that strict compliance with the System, the Franchise Agreement, and the Manuals is essential for all franchisees. This is because a franchisee's failure to adhere to these standards can damage the reputation and goodwill of the Bonchon network and its Proprietary Marks. Bonchon also retains the right to modify the System and its requirements, and franchisees are expected to implement these changes as if they were part of the original agreement.