Does Bonchon's right to operate a Bonchon Restaurant at a Nontraditional Location within the Development Territory constitute an exception to the exclusivity granted in the Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
rds imposed in connection with same. See the description of the Franchise Agreements above in this Item 12.
For so long as the Area Development Agreement is in effect, neither we nor any of our affiliates (meaning any individual or entity we control, which controls us or which is under common control with us, together our "affiliates") will, within the Development Territory, operate or grant a franchise for a restaurant business operated under the Proprietary Marks of the type franchised to you, or a similar or competitive business, except for the rights we reserve that are described below (including, without limitation, our right to operate a Bonchon Restaurant or offer and sell Bonchon products and services at a Nontraditional Location located within your Development Territory). These restrictions, which are subject to the Trade Area Satisfaction Exception (as defined below), will terminate immediately upon the expiration or termination of the Area Development Agreement for any reason. If your Development Territory is comprised of various geographic trade areas within a particular or one or more cities, states or regions and we designate a specific number of Businesses that you may develop or operate within each geographic trade area, your exclusive right to develop and operate Bonchon Businesses within a certain geographic trade area will terminate once you have developed the specified number of Bonchon Businesses in the subject geographic trade area. For the avoidance of doubt, if your Development Territory includes City A, City B and City C and we grant you the right to develop two Bonchon Businesses in each city, then your right to develop Bonchon Businesses in City A will cease once you developed and commenced operations of two Bonchon Businesses. Accordingly, we will have the right to develop and operate or grant a third party the right to develop and operate additional Bonchon Businesses in City A, even if you have not fully satisfied your development obligations under your Area Development Agreement with respect to the other geographic trade areas within the Development Territory (e.g. in City B and City C) (the "Trade Area Satisfaction Exception");
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the brand reserves the right to operate Bonchon Restaurants or offer and sell Bonchon products and services at Nontraditional Locations within a franchisee's Development Territory. This right is explicitly stated as an exception to any exclusivity granted in the Area Development Agreement. This means that even if a franchisee has an Area Development Agreement for a specific territory, Bonchon can still establish locations such as kiosks, mobile units, or restaurants within sports arenas, malls, airports, and other venues considered "Nontraditional Locations" inside that territory.
Bonchon defines "Nontraditional Locations" to include a wide array of venues with restricted public access or unique operating conditions. These locations range from sports arenas, theaters, and resorts to food retailers, schools, hospitals, airports, and even remote or virtual kitchens. The franchisee will not receive any compensation for sales made by Bonchon or its affiliates at these Nontraditional Locations within the Development Territory.
This exception to territorial exclusivity could significantly impact a franchisee's potential revenue and market share. While the franchisee focuses on developing traditional Bonchon restaurants within their designated area, Bonchon retains the freedom to tap into additional customer segments through alternative channels in these Nontraditional Locations. Prospective franchisees should carefully consider the potential impact of these Nontraditional Locations on their business and conduct thorough market research to assess the viability of their Development Territory, given this potential competition from the franchisor itself.