Does the Bonchon franchise agreement confer any right to the franchisee to participate in or benefit from other business activities engaged in by Bonchon or its affiliates?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
hon Restaurants that you developed in City A pursuant to this Agreement except as we are otherwise permitted in Section 3.03 below or under the Franchise Agreement.
Outside of the Development Territory, we and/or our affiliates reserve the right to operate any number of Bonchon Businesses, and/or authorize others to operate same, at any location whatsoever (including one or more locations that may be proximate to, but not within, the Development Territory).
You acknowledge that this Agreement confers no marketing exclusivity in the Development Territory on you, and that all Bonchon Businesses (whether Company-owned, Company joint-ventured, franchised or otherwise) may solicit, service, advertise and offer their products and services to any individual or entity, regardless of your or its geographic location, including your Development Territory.
3.03 Rights We Reserve
You agree that we and/or our affiliates may engage in any business activity whatsoever in or outside the Development Territory except as we are restricted by Section 3.02 of this Agreement, and that this Agreement does not confer upon you any right to participate in or benefit from any such other business activity (regardless of whether it is conducted under the Proprietary Marks or not). Our rights to engage in other business activities are specifically reserved and may not be qualified or diminished in any way by implication. We thus may engage in, or authorize others to engage in, any form of business offering and selling any type of product or service except as we are restricted by Section 3.02 of this Agreement. By way of example, we and/or our affiliates may own, operate or authorize others to own or operate any type of business at any location we choose, including within your Development Territory, so long as such other business does not sell under the Proprietary Marks the type of products or services which your Bonchon Businesses offer and sell (except as permitted below). Further, we and/or our affiliates may own, operate or authorize others to own or operate Bonchon Businesses at any location outside of your Development Territory (including immediately proximate thereto).
In addition, you understand and agree that we and/or our affiliates alone have the right to offer and sell within and outside your Development Territory, and under the Proprietary Marks, any and all products or services and/or components or ingredients thereof, (including those used or sold by your Bonchon Businesses), and whether or not a part of the Bonchon System, through any alternate channels of distribution, that is, any method of distribution other than a Bonchon Business situated within your Development Territory including, without limitation, the internet/worldwide web; any other form of electronic commerce; "800" or similar toll-free telephone numbers; mail order; catalogs; television sales (including "infomercials"); telemarketing or other direct marketing sales; or, any other channel of distribution whatsoever except for a Bonchon Business. You will not be entitled to any compensation in connection with these sales within your Development Territory.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to the 2025 Bonchon Franchise Disclosure Document, the franchise agreement does not confer any right to the franchisee to participate in or benefit from other business activities engaged in by Bonchon or its affiliates. Bonchon reserves the right to engage in any business activity whatsoever in or outside the Development Territory, except as restricted by Section 3.02 of the agreement. This means Bonchon can operate or authorize others to operate any type of business, including those within the franchisee's Development Territory, as long as they do not sell products or services under the Bonchon Proprietary Marks that the franchisee's Bonchon Businesses offer, with some exceptions.
Bonchon also retains the right to sell Bonchon System products and services to national, regional, and institutional accounts both within and outside the Development Territory. These accounts are defined as organizational or institutional customers whose presence is not confined to the franchisee's Development Territory. While Bonchon may offer the franchisee the opportunity to fulfill orders from these accounts within their territory, they are not obligated to do so, and the franchisee is not entitled to compensation if Bonchon or another franchisee serves the customer.
This lack of participation rights in other business activities and the handling of national accounts are common in franchising. It allows Bonchon to pursue various business opportunities without being obligated to share the benefits with franchisees. However, it also means that franchisees are limited to the scope of their own franchised business and do not benefit from other ventures Bonchon or its affiliates may undertake. Prospective franchisees should consider this when evaluating the potential return on investment and the level of control they will have over their business.