Can a Bonchon franchisee withhold, set-off, or recoup payment of any amount due based on alleged non-performance by Bonchon?

According to Bonchon's 2025 Franchise Disclosure Document, a franchisee is not permitted to withhold, set-off, or recoup any payments owed to Bonchon or its affiliates, regardless of any alleged non-performance or breach of obligations by Bonchon. This means that franchisees must continue to make all required payments, even if they believe Bonchon is not fulfilling its obligations under the franchise agreement.

This requirement places a significant financial obligation on the franchisee, as they must continue to pay fees and other amounts due, even if they have a legitimate dispute with Bonchon. Failure to make timely payments could result in penalties, interest charges, or even termination of the franchise agreement. The franchisee's only recourse in such a situation would be to pursue legal action against Bonchon while still meeting their financial obligations.

This type of clause is relatively common in franchise agreements, as it protects the franchisor's revenue stream and ensures that franchisees cannot unilaterally withhold payments. However, it also creates a power imbalance, as the franchisee may be hesitant to raise concerns or disputes with Bonchon if they fear retaliation or financial penalties. Prospective Bonchon franchisees should carefully consider this provision and seek legal advice to understand their rights and obligations.

It is important for potential Bonchon franchisees to understand the implications of this clause and to assess their own financial capacity to handle potential disputes with Bonchon while still meeting their payment obligations. Franchisees may want to negotiate for some form of dispute resolution mechanism or escrow account to protect their interests in the event of a disagreement with Bonchon.