What is the 'Protected Territory' for a Bonchon franchise?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
will conduct during our pre-opening on-site training.
ITEM 12 TERRITORY
Franchise Agreement
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. We will grant you a designated location (the "Restaurant Location") in a specific protected territory (the "Protected Territory") within which you must operate your Bonchon Restaurant.
You may operate your franchised Business from only one Restaurant Location within your Protected Territory. "Restaurant Location" means a location you select and we approve, from which you conduct the Bonchon Business. Except in high-density population centers, your Protected Territory (which we will draw using our mapping system) will consist of the area inside a circle whose center lies at the Bonchon Restaurant Location and whose radius extends outward from the circle's center.
We approve or disapprove of the site for your Restaurant Location under pursuant to the terms and conditions set forth in the Franchise Agreement and in accordance with our then-current standards imposed in connection with same. 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 operate 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 Area will be determined on a case-by-case basis. The Restaurant Location and Protected Territory will be designated in Exhibit A to your Franchise Agreement.
You may not relocate the Restaurant without our previous written approval. You must pay us a Relocation Fee equal to 25% of our then-current Initial Franchise Fee, plus reimburse us for any reasonable costs we incur in considering your request, provided, however, you will not have to pay us a Relocation Fee or reimburse us for our costs in considering your request to relocate a Remote Kitchen Restaurant when such relocation occurs upon the natural expiration of the lease for your Restaurant Location. For the avoidance of doubt, you will be required to pay us a Relocation Fee and reimburse us for our costs in considering your request to relocate your Remote Kitchen Restaurant Location, if the lease for your Restaurant Location is terminated due to your default. We will grant approval if you are in compliance with the Franchise Agreement, you have paid all money owed to us and our affiliates, the proposed location meets our site selection criteria, and you comply with the lease requirements in the Franchise Agreement. We may, if we wish, inspect your proposed new location.
Your Bonchon Business may only offer and sell its products and services from your Bonchon Restaurant at the Restaurant Location situated within your designated Protected Territory. Your Bonchon Business will be prohibited from directly delivering products to customers; rather, it will be required to utilize a third-party delivery service that we have designed and/or approved in advance in order to fulfill online delivery orders. Your Business may not sell any products or services through any alternative channels of distribution, such as the internet/worldwide web and other forms of electronic commerce; "800" or similar toll-free telephone numbers; supermarkets, grocery stores or convenience stores; mail orders; catalogs; telemarketing or other direct marketing sales; or, any other channel of distribution except for your franchised Bonchon Restaurant at the Restaurant Location situated within your Protected Territory.
While the Franchise Agreement is in effect, we and our affiliates will not, in your Protected Territory, operate a company-owned Bonchon Business, or grant a franchise for a Bonchon Business, except as described below. We and our affiliates can operate any number of Bonchon Businesses, and/or authorize others to operate them, at any location, including locations that may be proximate to, adjacent to or abutting the boundary of your Protected Territory.
We and/or our affiliates may engage in any type of business activity anywhere (including in or outside of the Protected Territory) except as we are restricted as described in the preceding paragraph. The Franchise Agreement does not confer upon you any right to participate in or benefit from any other business activity, whether it is conducted under the Proprietary Marks or not. For example, we and/or our affiliates may own, operate or authorize others to own or operate any type of business at any location, including within your Protected Territory, so long as the other business does not sell under the Proprietary Marks the type of products or services which your Bonchon Business offers and sells, except as permitted below. You will receive no compensation for these businesses' sales.
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee will be granted a designated location (Restaurant Location) within a specific protected territory (Protected Territory). However, the franchise agreement does not provide an exclusive territory, meaning franchisees may face competition from other franchisees, company-owned outlets, or other distribution channels and competitive brands controlled by Bonchon.
Except for restaurants in high-density population centers, the Protected Territory typically consists of the area inside a circle centered at the Bonchon Restaurant Location, extending outward by a certain radius. The specific size of the Protected Territory depends on the market area, including factors like population density and drive times. While there is no set minimum or maximum, Bonchon anticipates that the radius will generally not exceed 3 miles or be less than 0.25 miles. For Remote Kitchen Restaurants, the Protected Territory will be smaller, with a radius of no more than one-tenth (0.1) mile. The Restaurant Location and Protected Territory will be designated in an exhibit to the Franchise Agreement.
Bonchon, and/or its affiliates, retain the right to sell products or services through alternative distribution methods (such as the internet, supermarkets, or telemarketing) anywhere, including within a franchisee's Protected Territory. They can also sell to national, regional, and institutional accounts, even if those accounts are located within the Protected Territory. Bonchon also has the right to purchase, merge, or affiliate with other businesses, even if those businesses compete with the franchisee and are located within or near the Protected Territory. These activities will not result in any compensation for the franchisee.
Prospective Bonchon franchisees should carefully review Exhibit A to the Franchise Agreement to understand the exact boundaries of their Protected Territory. They should also consider the potential for competition from other Bonchon channels and the impact of Bonchon's ability to engage in other business activities within or near their territory. Understanding these limitations is crucial for assessing the potential profitability and risks associated with a Bonchon franchise.