Does the Bonchon franchise agreement permit the use of Confidential Information for purposes other than operating the franchised Bonchon Business?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to use and permit the use of our Confidential Information (as defined below) solely in connection with the operation of your franchised Bonchon Business. You further agree that you will never – during the Initial Term or any Successor Term of this Agreement, or any time after this or any Successor Agreement expires or terminates, or your rights under this Agreement or any Successor Agreement are assigned or terminated – divulge or use any of our Confidential Information for the benefit of yourself, your owners (if you are a business entity) any third party (including any person, business entity or enterprise of any type or nature), nor will you directly or indirectly aid any such third party to imitate, duplicate or "reverse engineer" any of our Confidential Information.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are explicitly restricted from using Confidential Information for any purpose other than operating their franchised Bonchon Business. The franchise agreement states that during the term of the agreement, or after it expires or terminates, franchisees cannot divulge or use Bonchon's Confidential Information for their own benefit, the benefit of their owners (if the franchisee is a business entity), or any third party. This restriction also prohibits franchisees from aiding any third party in imitating, duplicating, or reverse engineering Bonchon's Confidential Information.
This is a standard practice in franchising, as franchisors need to protect their proprietary information and trade secrets. The definition of "Confidential Information" is broad, encompassing all aspects of the Bonchon System, including operational methods, manuals, recipes, supply sources, pricing, marketing strategies, customer lists, and technology. This broad definition means that franchisees must be extremely careful about how they use and protect information related to their Bonchon franchise.
The franchise agreement also specifies that upon termination of the franchise agreement, the franchisee must cease using and return all Confidential Information to Bonchon. This includes manuals, software, customer lists, and any other materials related to the Bonchon business. The franchisee is only allowed to retain a copy of the franchise agreement, correspondence with Bonchon, and documents needed for legal compliance. This further emphasizes the importance Bonchon places on protecting its Confidential Information and preventing it from being used outside of the franchised business.
These restrictions are designed to protect Bonchon's competitive advantage and ensure that franchisees do not use the franchisor's proprietary information to benefit themselves or others, especially in a competing business. Violation of these confidentiality provisions can lead to termination of the franchise agreement and potential legal action.