What is the scope of the non-competition agreement related to Bonchon during the term of employment/service/association/ownership participation?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
ons to, deletions from, and modifications and variations of the components constituting the Bonchon System or the systems and methods of operations which are now, or may in the future, be employed by Franchisor, including all standards and specifications relating thereto and the means and manner of offering and selling same; and, all other components, specifications, standards, requirements and duties imposed by Franchisor or its Affiliates.
I will at no time copy, duplicate, record or otherwise reproduce any of the Confidential Information or material containing it, in whole or in part, store them in a computer retrieval or data
base, nor otherwise make them available to any unauthorized person. Upon the expiration or other termination for any reason of my employment, association, service or ownership participation, I agree to return to Franchisor or Area Developer, as the case may be, all Confidential Information or material containing it (in whole or in part) in my possession utilized during my employment, association, service or ownership participation.
I further agree that during the term of my employment/service/association/ownership participation, and under the circumstances set forth in the following paragraph I will not, directly or indirectly, engage or participate in any other business which engages in any of the activities which the Area Development Agreement contemplates will be engaged in by Area Developer under the Franchise Agreements; or, which offers or sells any other service, product or component which now or in the future is part of the Bonchon System, or any confusingly similar product or service. I agree that I am prohibited from engaging as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant in any other business or activity which offers or sells (or grants franchises or licenses to third parties to operate businesses that offer or sell) Korean fried chicken or that serves chicken as a primary menu item.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, during the term of employment, service, association, or ownership participation, individuals are restricted from engaging in any business activities that the Area Development Agreement contemplates for Area Developers under the Franchise Agreements. This includes offering or selling any service, product, or component that is currently or will be part of the Bonchon system, or any confusingly similar product or service.
The agreement specifically prohibits involvement as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant in any business that offers or sells Korean fried chicken or serves chicken as a primary menu item. A business is considered to serve chicken as a primary menu item if it derives 25% or more of its gross revenues from selling chicken, which is defined as a "Competitive Business."
The non-compete agreement aims to prevent both direct and indirect competition, including consulting for Competitive Businesses, working as an independent contractor for them, or providing any assistance or information that could materially aid a competitor. However, individuals are allowed to own up to 5% of the capital stock of a Competitive Business for investment purposes, provided the company is publicly held and traded on a national or regional stock exchange, or through NASDAQ, and neither the individual nor the Area Developer controls the company.