What constitutes interference with Bonchon's ability to franchise or license others, and what are the consequences?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
6.03 Time is of the Essence
Subject to the provision of Section 17.01 below ("Unavoidable Delay or Failure to Perform (Force Majeure)"), your timely performance of your obligations under Article 6 of this Agreement is of material importance and is of the essence to this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
Based on the 2025 Bonchon Franchise Disclosure Document, a franchisee's failure to meet the development schedule outlined in their Area Development Agreement constitutes a material breach that interferes with Bonchon's ability to franchise. Specifically, this occurs if the franchisee fails to execute the Franchise Agreement by the Due Date of Execution of the Lease or fails to commence operations by the Commencement of Operations Date. These dates are specified in the agreement.
The primary consequence of such a breach is the immediate termination of the Area Development Agreement, provided Bonchon gives the franchisee an opportunity to cure the breach as per Section 15.03 of the agreement. However, termination of the Area Development Agreement does not necessarily terminate existing Franchise Agreements for Bonchon Businesses that have already commenced operations, provided the franchisee is in full compliance with those agreements.
Upon termination, the franchisee loses the right to develop any remaining undeveloped Bonchon Businesses within the designated Development Territory. Furthermore, the Area Development Fee attributable to these undeveloped businesses is also forfeited. Bonchon then has the right to operate or franchise Bonchon Businesses within the Development Territory without violating the original agreement. This remedy is in addition to any other legal or equitable remedies Bonchon may pursue. The FDD emphasizes that timely performance of obligations under the Area Development Agreement is of material importance.