What factors does Bonchon consider when approving sites for a Bonchon franchise?

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Pre-Opening Obligations

Area Development Agreement

If you sign an Area Development Agreement with us, then, under the Area Development Agreement, we will:

• (1) Designate your Development Territory, the number of Businesses you will open, and the development schedule setting the timetable you will follow for opening the Businesses, based on our mutual agreement. (Area Development Agreement, Section 3.01 and 6.01) You and we will decide on your Development Territory together, considering factors such as the general locations and neighborhoods and proximity to customers in the Development Territory we are considering; traffic patterns in the Development Territory; co-tenant attractiveness in the sites available in the Development Territory; size of the available spaces in the Development Territory; age and condition of the buildings in which the Restaurant Locations might be situated in the Development Territory being considered; the availability of locations and necessary zoning in the Development Territory; and, the location of competitors in the Development Territory. In deciding on the number of Bonchon Businesses and the development schedule for opening them, you and we will consider factors such as the potential total number of Businesses in the Development Territory; how aggressive the opening schedule should be; your experience, if any, in the industry; your experience in franchising; and, the capital commitment you are able and willing to make. If you and we do not agree on the Development Territory, the number of Businesses to be opened and the development schedule, then you and we will not sign an Area Development Agreement. We do not approve or disapprove of the site for your first Restaurant Location under the Area Development Agreement, we do this under, and pursuant to the terms and conditions set forth in, the unit Franchise Agreement and in accordance with our then-current standards imposed in connection with same. However, we do approve and disapprove the sites for your subsequent Restaurant Locations pursuant to the terms and conditions set forth in, the Area Development Agreement and in accordance with our then-current standards imposed in connection with same.
• (2) Under the Unit Franchise Agreements, approve or disapprove the sites you propose you for your Restaurant Locations within your Development Territory, perform the training, instruction, assistance and other activities and services for which the Franchise Agreements provide. (Area Development Agreement, Section 8.01).

Franchise Agreement

Before you open your Restaurant, we will:

(1) Approve or disapprove a site for your Restaurant Location. We do not currently own sites for

leasing to franchisees. You select the site for your Restaurant Location, and we approve or disapprove your proposed site. (Franchise Agreement, Section 6.01) If you and we cannot agree upon a Restaurant Location within 90 days following the date we sign the Franchise Agreement, then we can terminate the Franchise Agreement. If we elect to terminate the Franchise Agreement, then you must sign a General Release in the form of Exhibit D to this Disclosure Document. You will not be entitled to a refund of your Initial Franchise Fee.

We may require you to submit maps, completed checklists, photographs, copies of proposed leases, diagrams of the premises with measurements and other information and materials which we may reasonably require to evaluate your proposed Restaurant Location. We may visit your proposed Restaurant Location, but the Franchise Agreement does not require us to do so. If you request that we visit the proposed Restaurant Location, the first visit will be free of cost, with any additional visits costing $500 per day plus the cost of our travel expenses.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 45–60)