What is the non-exclusive territory covered by the Cross-License Agreement for Bonchon franchises?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Bonchon International and Bonchon USA have licensed us the rights to use the Bonchon System, trademarks, service marks and other intellectual property and to sublicense them to our franchisees in separate cross-license agreements effective as of December 26, 2018 and January 7, 2019, respectively (collectively, the "Cross-License Agreement"). The initial term of the Cross-License Agreement is twenty years. The non-exclusive territory of the Cross-License Agreement is the United States, its territories and possessions. There are no provisions in the Cross-License Agreement regarding cancellation of that agreement. So long as we are not in default, we will have the right to enter into renewal Cross-License Agreements for additional consecutive terms of twenty years each.
Source: Item 13 — TRADEMARKS (FDD pages 65–68)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the non-exclusive territory covered by the Cross-License Agreement is the United States, its territories, and possessions. This agreement, effective as of December 26, 2018, and January 7, 2019, grants Bonchon the rights to use and sublicense the Bonchon system, trademarks, service marks, and other intellectual property to its franchisees. The initial term of this agreement is twenty years, with options for renewal for additional consecutive terms of twenty years each, provided Bonchon is not in default. There are no provisions for cancellation of the Cross-License Agreement.
For a prospective Bonchon franchisee, this means that the rights to operate under the Bonchon brand are secured through this Cross-License Agreement, which covers the entire United States and its territories. However, the rights are non-exclusive, implying that Bonchon can enter into similar agreements with other parties within the same territory. This is a common arrangement in franchising, allowing the franchisor flexibility in expanding the brand's presence.
It is important for potential franchisees to understand the implications of a non-exclusive territory. While it provides the right to operate a Bonchon franchise, it does not prevent the franchisor from granting similar rights to others, potentially increasing competition within the same geographic area. Franchisees should inquire about Bonchon's plans for future expansion and how the franchisor intends to manage potential conflicts or market saturation. Understanding these factors is crucial for making an informed investment decision.