What is the definition of 'affiliates' in the context of a Bonchon Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
For so long as the Area Development Agreement is in effect, neither we nor any of our affiliates (meaning any individual or entity we control, which controls us or which is under common control with us, together our "affiliates") will, within the Development Territory, operate or grant a franchise for a restaurant business operated under the Proprietary Marks of the type franchised to you, or a similar or competitive business, except for the rights we reserve that are described below (including, without limitation, our right to operate a Bonchon Restaurant or offer and sell Bonchon products and services at a Nontraditional Location located within your Development Territory). These restrictions, which are subject to the Trade Area Satisfaction Exception (as defined below), will terminate immediately upon the expiration or termination of the Area Development Agreement for any reason. If your Development Territory is comprised of various geographic trade areas within a particular or one or more cities, states or regions and we designate a specific number of Businesses that you may develop or operate within each geographic trade area, your exclusive right to develop and operate Bonchon Businesses within a certain geographic trade area will terminate once you have developed the specified number of Bonchon Businesses in the subject geographic trade area. For the avoidance of doubt, if your Development Territory includes City A, City B and City C and we grant you the right to develop two Bonchon Businesses in each city, then your right to develop Bonchon Businesses in City A will cease once you developed and commenced operations of two Bonchon Businesses. Accordingly, we will have the right to develop and operate or grant a third party the right to develop and operate additional Bonchon Businesses in City A, even if you have not fully satisfied your development obligations under your Area Development Agreement with respect to the other geographic trade areas within the Development Territory (e.g. in City B and City C) (the "Trade Area Satisfaction Exception"); provided, however, that neither we nor any third party will have the right to develop and operate a Bonchon Business within the Protected Territory granted under the Franchise
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the term 'affiliates' in the context of the Area Development Agreement refers to any individual or entity that controls Bonchon, is controlled by Bonchon, or is under common control with Bonchon. This definition is important because it clarifies the scope of restrictions placed on Bonchon regarding operating or franchising similar businesses within a franchisee's Development Territory.
Specifically, Bonchon and its affiliates are restricted from operating or franchising a restaurant business under the Proprietary Marks, or a similar competitive business, within the Development Territory granted to the franchisee. This restriction remains in effect as long as the Area Development Agreement is active. However, Bonchon retains certain rights, such as operating a Bonchon Restaurant or offering and selling Bonchon products and services at a Nontraditional Location within the Development Territory.
This definition ensures that the franchisee understands the extent to which Bonchon and related entities are bound by the terms of the Area Development Agreement, particularly concerning territorial exclusivity. It is important for prospective franchisees to understand these terms to assess the potential for competition within their designated territory and to evaluate the overall value of the franchise opportunity.