What kind of competition might a Bonchon developer face within their Development Territory?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
quire additional franchises at any location.
Area Development Agreement
If you and we sign an Area Development Agreement, we will grant you a "Development Territory" and you will promise to develop, own and operate franchised Bonchon Businesses within the Development Territory. You will not receive an exclusive Development Territory. You may face competition from outlets that we own at nontraditional locations, from other channels of distribution or competitive brands that we control. Your Development Territory will be set forth on Exhibit A to your Area Development Agreement. The Development Territory includes the Protected Territories granted under the Franchise Agreement for each Bonchon Business that you develop. Each "Protected Territory" is restricted to a geographic area within which you agree to establish and operate a Bonchon Restaurant under a Franchise Agreement. Except in high-density population centers, a Restaurant's Protected Territory consists of the area inside a circle whose center lies at the Bonchon Restaurant Location and whose radius extends outward from the circle's center. The Protected Territory for your Bonchon Business depends on your market area, including population density, drive times, and similar factors. There is no set minimum or maximum Protected Territory. However, we do not anticipate (as a general rule) that the radius will ever be greater than 3 miles from the Bonchon Business or, less than 0.25 miles. If your Bonchon Business will be a Remote Kitchen Restaurant, your Protected Territory will be no greater than a one-tenth (0.1) mile radius from the Bonchon Business. Your Restaurant's specific Protected Territory will be somewhere in that range depending on your specific market and circumstances. For Restaurants located in high-density population centers, your Protected Territory will be determined on a case-by-case basis. 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.
For so long as the Area Development Agreement is in effect, neither we nor any of our affiliates (meaning any individual or entity we control, which controls us or which is under common control with us, together our "affiliates") will, within the Development Territory, operate or grant a franchise for a restaurant business operated under the Proprietary Marks of the type franchised to you, or a similar or competitive business, except for the rights we reserve that are described below (including, without limitation, our right to operate a Bonchon Restaurant or offer and sell Bonchon products and services at a Nontraditional Location located within your Development Territory). These restrictions, which are subject to the Trade Area Satisfaction Exception (as defined below), will terminate immediately upon the expiration or termination of the Area Development Agreement for any reason. If your Development Territory is comprised of various geographic trade areas within a particular or one or more cities, states or regions and we designate a specific number of Businesses that you may develop or operate within each geographic trade area, your exclusive right to develop and operate Bonchon Businesses within a certain geographic trade area will terminate once you have developed the specified number of Bonchon Businesses in the subject geographic trade area. For the avoidance of doubt, if your Development Territory includes City A, City B and City C and we grant you the right to develop two Bonchon Businesses in each city, then your right to develop Bonchon Businesses in City A will cease once you developed and commenced operations of two Bonchon Businesses. Accordingly, we will have the right to develop and operate or grant a third party the right to develop and operate additional Bonchon Businesses in City A, even if you have not fully satisfied your development obligations under your Area Development Agreement with respect to the other geographic trade areas within the Development Territory (e.g. in City B and City C) (the "Trade Area Satisfaction Exception"); provided, however, that neither we nor any third party will have the right to develop and operate a Bonchon Business within the Protected Territory granted under the Franchise
Agreement for each of the Bonchon Restaurants that you developed in City A pursuant to the Area Development Agreement except as otherwise permitted in the Franchise Agreement.
Outside of the Development Territory, we and our affiliates reserve the right to operate any number of Bonchon Businesses, and to authorize others to operate them, at any location we choose (including one or more locations that may be proximate to, but not within, the Development Territory).
We and/or our affiliates may engage in any business activity we choose in or outside the Development Territory except as we are restricted as described above, and the Area Development Agreement does not confer upon you any right to participate in or benefit from any other business activity (regardless of whether it is conducted under the Proprietary Marks or not). We thus may engage in, or authorize others to engage in, any form of business offering and selling any type of product or service except as restricted as described above. For example, we and/or our affiliates may own, operate or authorize others to own or operate any type of business at any location we choose, including within your Development Territory, so long as the other business does not sell under the Proprietary Marks the type of products or services which your franchised Bonchon Businesses offer and sell (except as permitted below). Further, we and/or our affiliates may own, operate or authorize others to own or operate Bonchon Businesses at any location outside of your Development Territory (including immediately proximate to it).
In addition, we and/or our affiliates alone have the right to offer and sell within and outside your Development Territory, and under the Proprietary Marks, any and all products or services and/or components or ingredients (including those used or sold by your franchised Bonchon Businesses), and whether or not a part of the Bonchon System, through any alternate channels of distribution, that is, any method of distribution other than a Bonchon Business situated within your Development Territory, including, without limitation, the internet/worldwide web; any other form of electronic commerce; "800" or similar toll-free telephone numbers; mail order; catalogs; television sales (including "infomercials"); telemarketing or other direct marketing sales; or, any other channel of distribution except for a Bonchon Business. You will not be entitled to any compensation in connection with these sales within your Development Territory.
We and/or our affiliates alone have the right to offer and sell Bonchon System products and services at any and all nontraditional locations, including nontraditional locations situated in your Development Territory, through the establishment of Bonchon Businesses, kiosks, mobile units, concessions or "shop in shops", and you may not engage in this activity. "Nontraditional Locations" includes sports arenas and venues; theaters; resorts; food retailers (including supermarkets, grocery stores and convenience stores); malls; schools and universities; hospital and healthcare facilities; airports; guest lodging facilities; day care facilities of any type; government facilities; condominium and cooperative complexes; the premises of any third party retailer which is not a Bonchon Business (including shops, stores and department stores); military bases and installations; airlines, railroads and other modes of mass transportation; any type of location commonly known as a "remote kitchen," "virtual kitchen," "ghost kitchen, "ghost restaurant," or other similar type of location that operates on a pick up and/or delivery only basis; and, any other location or venue to which access to the general public is restricted. You will receive no compensation for our or our affiliates' sales at Nontraditional Locations.
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a developer faces several potential competitive pressures within their Development Territory. Bonchon does not grant exclusive Development Territories, so developers may face competition from outlets that Bonchon owns at nontraditional locations, from other channels of distribution, or from competitive brands that Bonchon controls. Bonchon and its affiliates retain the right to sell Bonchon products and services to national, regional, and institutional accounts, even within a franchisee's Development Territory. These accounts include business entities with locations both inside and outside the territory, government agencies, lodging networks, healthcare networks, and the military. Bonchon can fulfill these orders themselves or offer the opportunity to the franchisee if they have an established Bonchon Business in the area. If the franchisee cannot or does not want to fulfill the order, Bonchon or another franchisee may serve the customer without compensating the original franchisee.
Bonchon and its affiliates can also offer and sell products or services through alternate channels of distribution, such as the internet, electronic commerce, toll-free numbers, mail order, catalogs, television sales, telemarketing, or other direct marketing sales, without compensating the franchisee. Bonchon can also establish Bonchon Businesses, kiosks, mobile units, or concessions in nontraditional locations within the Development Territory, such as sports arenas, theaters, resorts, food retailers, malls, schools, universities, hospitals, airports, and lodging facilities.
Furthermore, Bonchon retains the right to engage in any business activity within or outside the Development Territory, except as specifically restricted in the Area Development Agreement. This means Bonchon can own, operate, or authorize others to operate any type of business within the Development Territory, as long as it does not sell the same type of products or services under the Bonchon Proprietary Marks. Outside the Development Territory, Bonchon can operate or authorize others to operate any number of Bonchon Businesses at any location, even if proximate to the Development Territory. These competitive factors highlight the importance of a Bonchon developer thoroughly understanding the terms of the Area Development Agreement and Franchise Agreement to assess the potential impact on their business.