Regarding the Bonchon franchise agreement, what rights does Bonchon have that it can exercise without restriction?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If we exercise our right of first refusal, you and your selling owner(s) agree that, for two (2) years beginning on the closing date, you and they will be bound by the non-competition covenant contained in Section 12.02 above. We have the unrestricted right to assign this right of first refusal to a third party, who then will have the rights described in this Section.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon has the unrestricted right to assign its right of first refusal to a third party. This means that if a franchisee decides to sell their Bonchon restaurant, Bonchon has the first opportunity to buy it. However, Bonchon can transfer this right to another party, allowing that third party to step in and purchase the franchise instead.
This right gives Bonchon significant flexibility in managing its franchise network. By assigning the right of first refusal, Bonchon can facilitate the entry of new franchisees or consolidate ownership within its existing network without directly intervening in the transaction. This can be particularly useful if Bonchon wants to bring in a franchisee with specific expertise or resources that align with its strategic goals.
For a prospective franchisee, this clause means that the potential buyer of their franchise could be Bonchon itself or a third party designated by Bonchon. While the franchisee still has the opportunity to sell, they must be aware that Bonchon has the power to determine who the ultimate buyer will be. This could impact the negotiation process and the terms of the sale.
It is important for franchisees to understand the implications of this right and how it could affect their ability to sell their franchise in the future. Franchisees should seek legal counsel to fully understand their rights and obligations under the franchise agreement, particularly regarding the sale or transfer of their franchise.