What legend must Bonchon franchisees print on securities or other evidences of ownership?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- E. You will maintain stop instructions against the transfer on your business entity's corporate records of any securities or other ownership interests, and will not issue securities or other evidences of ownership without the following legend printed legibly and conspicuously on the face of the security or other evidence of ownership:
- "The transfer of this certificate and the interests it represents are subject to the terms and conditions of one or more Franchise Agreements with BONCHON FRANCHISE LLC, and to the restrictive provisions of the organizational documents of the issuer. Please refer to those documents for the terms of the restrictions."
- F. Without our prior written consent (which shall not be unreasonably withheld, delayed or conditioned), you may not permit any mortgage, lien, pledge or other security interest in respect of any of your business entity's shares, equity interests or other ownership interests. Any violation of this restriction will give us the right to terminate this Agreement immediately upon notice to you.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees must adhere to specific requirements regarding the issuance of securities or other ownership interests in their business entity. Bonchon requires franchisees to maintain stop instructions against the transfer of any securities on the business entity's corporate records.
Furthermore, franchisees are prohibited from issuing securities or other evidences of ownership without printing a specific legend legibly and conspicuously on the face of the security or ownership document. This legend serves to notify any potential transferee that the transfer of the certificate and the interests it represents are subject to the terms and conditions of the Franchise Agreement with Bonchon Franchise LLC, as well as the restrictive provisions of the organizational documents of the issuer. The legend directs interested parties to refer to those documents for the specific terms of the restrictions.
This requirement ensures that all parties are aware of the limitations and obligations associated with the franchise agreement and the franchisee's organizational documents. It protects Bonchon's interests by maintaining control over who can become involved in a franchise and under what conditions. This is a fairly standard practice in franchising, as franchisors typically want to ensure that any new owners or investors are fully aware of and compliant with the franchise agreement terms.
Additionally, Bonchon mandates that franchisees cannot permit any mortgage, lien, pledge, or other security interest in respect of any of their business entity's shares, equity interests, or other ownership interests without prior written consent from Bonchon. Violation of this restriction grants Bonchon the right to terminate the Franchise Agreement immediately upon notice to the franchisee.