Does the Bonchon franchise agreement grant an exclusive territory to the franchisee?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
will conduct during our pre-opening on-site training.
ITEM 12 TERRITORY
Franchise Agreement
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. We will grant you a designated location (the "Restaurant Location") in a specific protected territory (the "Protected Territory") within which you must operate your Bonchon Restaurant.
You may operate your franchised Business from only one Restaurant Location within your Protected Territory. "Restaurant Location" means a location you select and we approve, from which you conduct the Bonchon Business. Except in high-density population centers, your Protected Territory (which we will draw using our mapping system) will consist of the area inside a circle whose center lies at the Bonchon Restaurant Location and whose radius extends outward from the circle's center.
We approve or disapprove of the site for your Restaurant Location under pursuant to the terms and conditions set forth in the Franchise Agreement and in accordance with our then-current standards imposed in connection with same. The Protected Territory for your Bonchon Business depends on your market area, including population density, drive times, and similar factors. There is no set minimum or maximum Protected Territory. However, we do not anticipate (as a general rule) that the radius will ever be greater than 3 miles from the Bonchon Business or less than 0.25 miles. If your Bonchon Business will operate a Remote Kitchen Restaurant, your Protected Territory will be no greater than a one-tenth (0.1) mile radius from the Bonchon Business. Your Restaurant's specific Protected Territory will be somewhere in that range depending on your specific market and circumstances. For Restaurants located in high-density population centers, your Protected Area will be determined on a case-by-case basis. The Restaurant Location and Protected Territory will be designated in Exhibit A to your Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees do not receive an exclusive territory under the standard franchise agreement. Instead, Bonchon grants a designated location within a specific protected territory where the franchisee must operate their Bonchon restaurant. This protected territory is not exclusive, meaning franchisees may face competition from other franchisees, outlets owned by Bonchon, or other distribution channels and competitive brands that Bonchon controls.
The size and shape of the protected territory depend on factors such as market area, population density, and drive times. For standard Bonchon restaurants, the protected territory is typically a circle with a radius between 0.25 and 3 miles from the restaurant location. However, for Remote Kitchen Restaurants, the protected territory is much smaller, with a radius of no more than one-tenth (0.1) of a mile. In high-density population centers, the protected area is determined on a case-by-case basis. The specific location and protected territory will be outlined in Exhibit A of the Franchise Agreement.
Bonchon retains the right to sell products and services through alternative distribution methods, such as the internet, supermarkets, and telemarketing, both within and outside the franchisee's protected territory. Franchisees will not receive any compensation for sales made through these alternative channels. Bonchon also has the right to engage in any type of business activity, including owning or operating other businesses, within the protected territory as long as these businesses do not sell the same type of products or services under the Bonchon brand, except as otherwise permitted. Bonchon may also purchase, merge, or affiliate with existing competitive or non-competitive businesses, which may operate within or near the protected territory under different names and marks.
For franchisees entering into an Area Development Agreement, Bonchon grants a "Development Territory" where the franchisee promises to develop, own, and operate multiple Bonchon businesses. However, this Development Territory is also not exclusive, and franchisees may face competition from Bonchon-owned outlets at nontraditional locations or other distribution channels. The franchisee is obligated to adhere to a development schedule, and failure to meet the schedule can result in termination of the Area Development Agreement. Even with an Area Development Agreement, the 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.