What is the geographic limit of the right to operate a franchised Bonchon Business developed under an Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Your right to operate a franchised Bonchon Business developed under an Area Development Agreement will be limited to the Bonchon Business' Restaurant Location situated in the respective Protected Territory located in the Development Territory. We do not approve or disapprove of the site for your first Restaurant Location under the Area Development Agreement, we do this under, and pursuant to the terms and conditions set forth in, the unit Franchise Agreement and in accordance with our then-current standards imposed in connection with same. However, we do approve and disapprove the sites for your subsequent Restaurant Locations pursuant to the terms and conditions set forth in, the Area Development Agreement and in accordance with our then-current standards imposed in connection with same. See the description of the Franchise Agreements above in this Item 12.
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the right to operate a franchised Bonchon business under an Area Development Agreement is limited to the Bonchon Restaurant's Location within its Protected Territory, which is situated inside the larger Development Territory. The Development Territory is defined in Exhibit A of the Area Development Agreement.
Bonchon does not offer exclusive Development Territories, meaning franchisees may face competition from company-owned outlets in nontraditional locations, other distribution channels, or competitive brands controlled by Bonchon. The Protected Territory is typically a circle centered on the Bonchon Restaurant Location. The radius of this circle depends on market factors like population density and drive times, but generally ranges from 0.25 miles to 3 miles. For Remote Kitchen Restaurants, the Protected Territory is smaller, with a radius of no more than 0.1 miles. In high-density population centers, the Protected Territory is determined on a case-by-case basis.
Bonchon retains the right to sell Bonchon products and services to national, regional, and institutional accounts both within and outside the Development Territory. Bonchon also reserves the right to operate any number of Bonchon Businesses, and to authorize others to operate them, at any location outside of the Development Territory. Furthermore, Bonchon can engage in any business activity within or outside the Development Territory, except as specifically restricted in the Area Development Agreement. This includes the ability to acquire or affiliate with competitive businesses, which may then operate within or near the Development Territory under different brand names.
If the Development Territory includes multiple geographic trade areas (e.g., different cities), the franchisee's exclusive rights in a specific trade area end once the specified number of Bonchon Businesses for that area have been developed. This is known as the "Trade Area Satisfaction Exception," allowing Bonchon to develop additional businesses in a city even if the franchisee hasn't fulfilled their overall development obligations in other areas. However, Bonchon cannot develop a Bonchon Business within the Protected Territory of an existing Bonchon Restaurant developed under the Area Development Agreement, except as permitted in the Franchise Agreement.