For a Bonchon franchise, what are the possible forms of ownership that can be selected?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. All of your business entity's organizational documents (including any partnership, partnership agreements, incorporation documents, organization/formation documents, bylaws, operating agreements, shareholders agreements, buy/sell or equivalent agreements, and trust instruments) will recite that the issuance or transfer of any Interest in you is restricted by the terms of this Agreement, and that the sole purpose for which you are formed (and the sole activity in which you are or will be engaged) is the conduct of a franchised Business pursuant to one or more franchise agreements from us and that your activities will be exclusively confined to such purpose. Your organizational documents will also include a "Supremacy of Franchise Agreement" clause reciting the following: "To the extent any provision of this Agreement conflicts, violates or is inconsistent with any provision of the Bonchon Franchise Agreement, the parties hereto agree that the provisions of such Franchise Agreement shall supersede the same and that the parties hereto shall enter into such amendments to this agreement as are necessary in order to make the relevant provisions consistent with or non-violative of the provisions of the Bonchon Franchise LLC Franchise Agreement."
- E. You will maintain stop instructions against the transfer on your business entity's corporate records of any securities or other ownership interests, and will not issue securities or other evidences of ownership without the following legend printed legibly and conspicuously on the face of the security or other evidence of ownership:
- "The transfer of this certificate and the interests it represents are subject to the terms and conditions of one or more Franchise Agreements with BONCHON FRANCHISE LLC, and to the restrictive provisions of the organizational documents of the issuer. Please refer to those documents for the terms of the restrictions."
- F. Without our prior written consent (which shall not be unreasonably withheld, delayed or conditioned), you may not permit any mortgage, lien, pledge or other security interest in respect of any of your business entity's shares, equity interests or other ownership interests. Any violation of this restriction will give us the right to terminate this Agreement immediately upon notice to you.
You shall not permit any mortgage, lien, pledge or other security interest in respect of any of your business entity's shares, equity interests or other ownership interests without our prior written consent. Any violation of the preceding restriction will give us the right to terminate this Agreement immediately upon notice to you.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the franchise agreement allows for various business entity types to operate a Bonchon franchise. These include partnerships, corporations, and other business entities formed for the purpose of operating a Bonchon restaurant. The organizational documents for these entities must state that their sole purpose is to conduct a franchised Bonchon business, and that any transfer of ownership interest is restricted by the terms of the franchise agreement.
Bonchon requires that all organizational documents, such as partnership agreements, incorporation documents, bylaws, and operating agreements, include a clause that the franchise agreement takes precedence. This means that if any provision in the entity's documents conflicts with the Bonchon Franchise Agreement, the franchise agreement will govern. This ensures that the Bonchon's standards and requirements are always upheld.
Furthermore, Bonchon mandates that any securities or ownership interests issued by the business entity must bear a legend indicating that their transfer is subject to the terms and conditions of the franchise agreement. This is to ensure that all potential owners are aware of the restrictions and obligations associated with owning a Bonchon franchise. Additionally, franchisees cannot permit any mortgage, lien, pledge, or other security interest in the business entity's shares or ownership interests without Bonchon's prior written consent, and failure to comply can result in immediate termination of the franchise agreement.
Bonchon also requires a current list of all owners of record and beneficial owners of any class of capital stock, general or limited partnership interests, membership interests or similar interests, and this list must be furnished to Bonchon upon request. This allows Bonchon to keep track of who owns and controls the franchise, ensuring compliance with the franchise agreement and maintaining the integrity of the Bonchon brand.