factual

Where in the Bonchon Franchise Agreement can I find information regarding renewal, termination, transfer and dispute resolution?

Bonchon Franchise · 2025 FDD

Answer from 2025 FDD Document

[Item 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP]

This table lists certain important provisions of the franchise and related agreements pertaining to renewal, termination, transfer and dispute resolution. You should read these provisions in the agreements attached to this Disclosure Document.

Franchise Agreement *

Provision Section in Franchise Agreement* Summary
a. Length of the franchise term Section 4.01 Term of Franchise Agreement will commence on the effective date and expire 10 years from the day your Bonchon Restaurant commences operations.
b. Renewal or exten- sion of the term Section 4.02, 13.01 You can enter into two consecutive Successor Franchise Agreements for a term of five years each if you comply with the conditions for a Successor Term.
h. "Cause" defined - non-curable defaults Sections 17.01 and 17.02 Automatic, without notice: bankruptcy, insolvency, receivership, dissolution, liquidation, foreclosure or levy. On notice to you: a. You fail to open the franchised Restaurant within 300 days following our signing of the Franchise Agreement or cease to operate the Business, abandon the franchise, or, fail to operate your Restaurant for two consecutive days during which you are required to operate, unless due to causes beyond your control. b. You omitted or misrepresented a material fact in information you furnished us in connection with our decision to sign the Franchise Agreement.
c. You and we agree in writing to terminate.
d. You do not secure a Restaurant Location within the required time
limits and procedures.
e. You lose the right to possess the Restaurant Location, but if the loss
is due to no fault of yours, you may apply for approval to relocate and
reconstruct.
f. You, your Operating Principal, General Manager, and/or Area Manger
and all other required to do so fail to attend or successfully complete
our Initial Training Program or Partner Training Program (as applicable).
g.
You, your Operating Principal, your General Manager and/or
Manager if you are a business entity, any owner, member, shareholder,
director or manager of yours is convicted of a felony, etc.
h. You make an unauthorized transfer.
i. You do not comply with the in-term covenant not to compete, or obtain
the required additional covenants, or you violate the restrictions
pertaining to the use of Confidential Information.
j. Before you open, we determine that you, your Operating Principal,
General Manager and/or
Manager failed to attend or successfully
complete the Initial Training Program or Partner Training Program (as
applicable).
k. You knowingly or through gross negligence conceal revenues;
knowingly maintain false books or records; falsify information or
otherwise defraud or make false representations to us; or submit any
false report to us.
l. You do not maintain the required financial records.
m. An audit shows that you understated your Gross Revenues by 5%
or more for any week or for the entire period of examination.
n. An audit shows that during a 36 week period, you submitted three
or more weekly reports or statements that understated your Gross
Revenues by 2% or more for any three weeks within the period of
examination, or for the entire period of examination.
o. You refuse us permission to inspect or audit.
p. You take any funds withheld from your employees' wages which
should have been set aside for the franchised Business' employee
taxes, FICA, insurance or benefits; wrongfully take our property;
systemically fail to deal fairly with your employees, customers or
suppliers; or knowingly permit or, having discovered the facts, fail to
take any action against or to discharge any agent, servant or employee
who has embezzled.
q. After curing a default which is subject to cure, you commit the same
act of default again within 6 months.
r. You make a willful misrepresentation or do not make a material
disclosure required by any governmental authority regarding any
matter involving your franchised Business and Restaurant.
s. You interfere or attempt to interfere with our
or our affiliates'
contractual relations and/or relationships with others.
Decidal Section in Franchise 2
------------------------------------------------------- ------------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Provision Agreement* Summary franchise agreement, area development agreement, lease or promissory note. (Subject to state law.)
i. Your obligations on Article 18
  • a. Pay all money owing to us or our affiliates, and third parties.
  • b. Stop using our Proprietary Marks, Confidential Information, trade secrets and Manuals.
  • c. Cancel assumed name or equivalent registration which contains
termination /
nonrenewal
  • "Bonchon", or any other Proprietary Marks of ours, or any variant, within 15 days.
  • d. If we terminate the Franchise Agreement for your default or you terminate through failure to make payment following notice to cure (see
section d. above), pay us all expenses and damages incurred as a result of your default or termination. Damages may include, for example, lost profits, lost opportunities, damage to our Proprietary Marks and reputation, travel and personnel costs and the cost of securing a new Business at or proximate to the Restaurant Location.
e. Immediately deliver to us all confidential information,manuals, computer software and database material, customer lists, records and files, documents, instructions, forms, advertising and promotional material, and all materiasl, signs and related items which bear our Proprietary Marks, or slogans or insignias or designs. f. Immediately sign agreements necessary for termination. g. Stop using the telephone numbers listed in directories under the name "Bonchon" or any confusingly similar name. h. Strictly comply with the post-termination/post-expiration covenants not to compete. i. Continue to abide by restrictions on the use of our Confidential Information, trade secrets and know-how.
  • j. Immediately refrain from engaging in any contacts with customers, suppliers, employees and all vendors of the Bonchon Business.
  • k. Immediately surrender to us all computer software, data storage
disks or tapes and other electronic media used in the operation of the franchised Business, printouts, and other information pertaining to computer operations, codes, procedures and programming. I. If we request, assign us your interest in the Restaurant Lease and vacate promptly. m. In 15 days, arrange with us for an inventory of personal property, fixtures, equipment, inventory and supplies. We have option for 30 days to buy these at fair market value. n. If we choose not to take over the Restaurant, redecorate and remodel it to deidentify it. If we terminate for cause, we can take possession of the Business. If you dispute the termination, then we can operate the Business until the final court determination. If the court decides the termination was not valid, we must make a complete accounting for the period when we operated the Business. (Subject to state law.)
j. Assignment of con- Section 14.01 We will have the right to assign if the assignee is financially responsible and economically capable of performing our obligations under the Franchise Agreement, and agrees to perform these obligations. We may sell our assets, Proprietary Marks, or System; go public, etc. (see Franchise Agreement)
tract by us
k. "Transfer" by you – Section 14.02 Any assignment, transfer, subfranchising, sublicensing, sale redemption or division of Agreement, franchised Business, Restaurant any interest in them or a business entity franchisee.
definition
I. Our approval of transfer by you Section 14.02, 14.03 No transfer without our consent except as provided in Franchise Agreement (for example, transfer to a business entity you form for convenience). (Subject to state law.)
m. Conditions for our approval of transfer Section 14.04 a. The person to whom you propose to transfer (the "transferee") must apply to us for acceptance.
v. Choice of forum Sections 18.13 and 13.03 Litigation must be in New York, New York, except that we may bring an action for an injunction in any court with jurisdiction (see Area Development Agreement). (Subject to state law).
u. Dispute resolution by None Not applicable.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 71–81)

What This Means (2025 FDD)

According to Bonchon's 2025 Franchise Disclosure Document, Item 17 provides details on renewal, termination, transfer, and dispute resolution, outlining key provisions within the Franchise Agreement and Area Development Agreement. This item references specific sections within these agreements that address these critical aspects of the franchise relationship.

The table in Item 17 summarizes various provisions related to these topics, such as the length of the franchise term, conditions for renewal, grounds for termination (both curable and non-curable defaults), obligations upon termination or non-renewal, and the conditions governing the transfer of the franchise. For instance, the initial franchise term is 10 years from the commencement of restaurant operations, with options for two consecutive 5-year successor agreements. Transfer of the franchise requires Bonchon's consent, and specific conditions apply to such transfers.

For a prospective Bonchon franchisee, understanding these provisions is crucial. It defines the duration of the agreement, the circumstances under which it can be renewed or terminated, and the procedures for transferring the franchise. It also clarifies the obligations of both the franchisee and franchisor upon termination or non-renewal, including financial responsibilities and adherence to non-compete covenants. Item 17 further specifies that litigation must be in New York, New York, although the franchisee's state law may supersede this provision. Since dispute resolution by arbitration or mediation is 'Not applicable', a franchisee should seek clarification from Bonchon on their current dispute resolution process.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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