Does Bonchon have the right of first refusal to purchase the assets of a franchise, and under what terms?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Accordingly, except as provided below, neither all nor any part of your interest in this Agreement; the franchise conveyed hereby; your rights, privileges or obligations under this Agreement; the franchised Business; your franchised Bonchon Restaurant; the ownership of your franchised Business; or, your rights to use the Bonchon System, Proprietary Marks, Confidential Information and Manuals may in whole or in part be assigned, sold, transferred, shared, sublicensed or divided, voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, in any fashion without first obtaining our written consent in accordance with this Article 14 and without first complying with our right of first refusal pursuant to Section 14.06 below.
If we elect not to exercise our right of first refusal and we consent to the proposed assignment or redemption, then you will, subject to the provisions of this Article, be free to assign this Agreement or the franchised Business to your proposed assignee on the terms and conditions specified in the notice if you satisfy the conditions of Section 14.04 for our approval of an assignment and if you close the transaction within sixty days (or such further time as may be stipulated by law, rule or regulation).
If, however, the terms specified in your notice are changed, the changed terms will be considered a new offer, and we will have an identical right of first refusal with respect to this new offer.
Our election not to exercise our right of first refusal with regard to any offer will not affect our right of first refusal with regard to any later or modified offer.
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.
If you are a business entity and a partial transfer is proposed through the assignment or redemption of more than 25% of your entity's ownership interests other than to any of your entity's co-owners, then we or our designee will have the option to purchase not only the interests being transferred but also all remaining interests, so that our resulting ownership will be 100% of your business entity.
The price of these remaining interests will be proportionate to the price of the interests initially being offered.
Our credit will be considered at least equal to the credit of any proposed purchaser.
We may substitute cash for the fair market value of any other form of payment proposed in the offer.
If we give notice of exercise of our right of first refusal, closing on our purchase must occur within the later of: (i) sixty (60) days following your receipt of our notice to you; (ii) the closing period (if any) specified in the subject offer; or, (iii) such longer period as may be necessary to conduct the due diligence provided for above.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon has a right of first refusal if a franchisee intends to sell their franchise. Before a franchisee can assign or transfer their interest in the Franchise Agreement, franchised Business, or Bonchon Restaurant, they must first comply with Bonchon's right of first refusal as detailed in Section 14.06. This right does not apply if the assignee is a member of the franchisee's immediate family.
If the franchisee's notice specifies changed terms, it is considered a new offer, granting Bonchon an identical right of first refusal. Bonchon's decision not to exercise its right of first refusal for one offer does not affect its right to refuse any later or modified offers. Bonchon can assign its right of first refusal to a third party.
If Bonchon exercises its right of first refusal, the franchisee and selling owners are bound by a non-competition covenant for two years from the closing date. If a franchisee is a business entity and proposes a partial transfer of more than 25% of the entity's ownership interests to someone other than a co-owner, Bonchon has the option to purchase all remaining interests so that its ownership becomes 100% of the business entity. The price for these remaining interests will be proportionate to the price of the interests initially offered. Bonchon's credit will be considered at least equal to any proposed purchaser, and Bonchon may substitute cash for the fair market value of any other form of payment proposed in the offer. Closing on Bonchon's purchase must occur within the later of 60 days following the franchisee's receipt of Bonchon's notice, the closing period specified in the offer, or a longer period necessary for due diligence.