For how long after the Bonchon franchise is terminated or expires is the franchisee prohibited from involvement in a competing business, and where does this restriction apply?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Section in Area Development Agreement | Summary |
|---|---|---|
| l. Our approval of transfer by you | Section 12.02, 12.03 and 12.04 | No transfer without our consent except as provided in Area Development Agreement (for example, transfer to a business entity you form for convenience). (Subject to state law.) |
| m. Conditions for our | Sections 12.03 | See l., above. |
| approval of transfer | and 12.04 | |
| n. Our right of first | None | Not applicable. |
| refusal to purchase | ||
| your business | ||
| o. Our option to | None | Not applicable |
| purchase your business | ||
| p. Your death or disa- bility | Section 12.04 | On your death or disability (if you are an individual), or the death or disability of your last surviving owner (if you are a business entity), that person’s rights pass to his or her "Estate". The Estate may continue operating the Business if it provides an acceptable Area Business Manager. This Area Business Manager must assume full time operation of the franchise within 90 days of death or disability. (Subject to state law.) |
| q. Non-competition | Section 11.01 | No involvement in competing business anywhere. (Subject to state law.) |
| covenants during the | ||
| term of the franchise | ||
| r. Non-competition covenants after the franchise is terminated or expires | Section 11.01 | No involvement in competing business for 2 years within your Development Territory, within a 20 mile radius of the perimeter of your Development Territory or within a 20 mile radius of the perimeter of (or within) any Bonchon Business (whether company-owned, franchised or otherwise established and operated). (Subject to state law.) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 71–81)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-compete covenant for two years. This restriction prevents the franchisee from being involved in a competing business within their Development Territory.
Additionally, the non-compete extends to a 20-mile radius of the perimeter of the Development Territory. It also includes a 20-mile radius of the perimeter of, or within, any Bonchon Business. This includes any Bonchon location, whether it is company-owned, franchised, or otherwise established and operated.
This non-compete agreement is in place to protect Bonchon's market share and brand recognition. It prevents former franchisees from using the knowledge and experience gained while operating a Bonchon franchise to directly compete with the brand in a defined geographical area. Prospective franchisees should carefully consider the implications of this restriction, especially if they plan to remain in the restaurant industry after their franchise agreement ends.