After the Bonchon franchise is terminated or expires, what are the geographic limits of the non-competition covenant?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Section in Area Development Agreement | Summary |
|---|---|---|
| l. Our approval of transfer by you | Section 12.02, 12.03 and 12.04 | No transfer without our consent except as provided in Area Development Agreement (for example, transfer to a business entity you form for convenience). (Subject to state law.) |
| m. Conditions for our | Sections 12.03 | See l., above. |
| approval of transfer | and 12.04 | |
| n. Our right of first | None | Not applicable. |
| refusal to purchase | ||
| your business | ||
| o. Our option to | None | Not applicable |
| purchase your business | ||
| p. Your death or disa- bility | Section 12.04 | On your death or disability (if you are an individual), or the death or disability of your last surviving owner (if you are a business entity), that person’s rights pass to his or her "Estate". The Estate may continue operating the Business if it provides an acceptable Area Business Manager. This Area Business Manager must assume full time operation of the franchise within 90 days of death or disability. (Subject to state law.) |
| q. Non-competition | Section 11.01 | No involvement in competing business anywhere. (Subject to state law.) |
| covenants during the | ||
| term of the franchise | ||
| r. Non-competition covenants after the franchise is terminated or expires | Section 11.01 | No involvement in competing business for 2 years within your Development Territory, within a 20 mile radius of the perimeter of your Development Territory or within a 20 mile radius of the perimeter of (or within) any Bonchon Business (whether company-owned, franchised or otherwise established and operated). (Subject to state law.) |
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 81–84)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot be involved in a competing business for two years. The geographic scope of this restriction includes the franchisee's Development Territory.
In addition to the Development Territory, the non-compete also extends to a 20-mile radius of the perimeter of the Development Territory. It further includes a 20-mile radius of the perimeter of, or within, any Bonchon Business. This applies whether the Bonchon Business is company-owned, franchised, or otherwise established and operated.
It is important to note that these non-competition covenants are subject to state law, which may impact their enforceability. A prospective franchisee should consult with a legal professional to understand the specific implications of these covenants in their state.