If a franchisee signs an Area Development Agreement with Bonchon, what is Bonchon obligated to do under that agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If you sign an Area Development Agreement with us, then, under the Area Development Agreement, we will:
- (1) Designate your Development Territory, the number of Businesses you will open, and the development schedule setting the timetable you will follow for opening the Businesses, based on our mutual agreement. (Area Development Agreement, Section 3.01 and 6.01) You and we will decide on your Development Territory together, considering factors such as the general locations and neighborhoods and proximity to customers in the Development Territory we are considering; traffic patterns in the Development Territory; co-tenant attractiveness in the sites available in the Development Territory; size of the available spaces in the Development Territory; age and condition of the buildings in which the Restaurant Locations might be situated in the Development Territory being considered; the availability of locations and necessary zoning in the Development Territory; and, the location of competitors in the Development Territory. In deciding on the number of Bonchon Businesses and the development schedule for opening them, you and we will consider factors such as the potential total number of Businesses in the Development Territory; how aggressive the opening schedule should be; your experience, if any, in the industry; your experience in franchising; and, the capital commitment you are able and willing to make. If you and we do not agree on the Development Territory, the number of Businesses to be opened and the development schedule, then you and we will not sign an Area Development Agreement. 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.
- (2) Under the Unit Franchise Agreements, approve or disapprove the sites you propose you for your Restaurant Locations within your Development Territory, perform the training, instruction, assistance and other activities and services for which the Franchise Agreements provide. (Area Development Agreement, Section 8.01).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 45–60)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee enters into an Area Development Agreement with Bonchon, Bonchon has specific obligations. Bonchon will designate the Development Territory, determine the number of Bonchon restaurants the franchisee will open, and set a development schedule for opening these restaurants. These terms are based on mutual agreement between Bonchon and the franchisee, considering factors like location, customer proximity, traffic patterns, co-tenants, space size, building conditions, zoning, and competitor locations. The number of restaurants and the development schedule will take into account the potential number of restaurants in the territory, the aggressiveness of the opening schedule, the franchisee's experience, and the franchisee's capital commitment.
Bonchon's approval of sites is handled differently for the first restaurant versus subsequent locations. Bonchon does not approve or disapprove the site for the first restaurant under the Area Development Agreement but does so under the unit Franchise Agreement. However, Bonchon will approve or disapprove the sites for subsequent restaurant locations within the Development Territory, according to the terms of the Area Development Agreement and Bonchon's standards.
Furthermore, under the Unit Franchise Agreements, Bonchon is obligated to approve or disapprove the sites proposed by the franchisee for their restaurant locations within their Development Territory. Bonchon will also perform the training, instruction, assistance, and other activities and services as specified in the Franchise Agreements.