What specific clause is removed from Section 12.02 of the Bonchon Franchise Agreement regarding the covenant not to compete?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
In Section 12.02 of the Franchise Agreement ("Covenant Not to Compete"), in the third paragraph thereof (which commences with the words "Further, during…"), the "no-poach" clause is removed – that is, the following specific words are removed: "(i) solicit for employment or hire our management personnel, the management personnel of any of our affiliates or the management personnel of any other franchised Business without first obtaining any written permission from us and the employer(s) of the personnel in question, or (ii)".
The remainder of the paragraph remains as is.
Section 12.02 of the Franchise Agreement ("Covenant Not to Compete") contains a covenant not to compete, which extends beyond the termination of the franchise.
This provision may not be enforceable under California law.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, specifically the California Addendum to the Franchise Agreement, a "no-poach" clause is removed from Section 12.02, which pertains to the covenant not to compete. This clause, found in the third paragraph of Section 12.02, restricts franchisees from soliciting or hiring Bonchon's management personnel, the management personnel of Bonchon's affiliates, or the management personnel of any other franchised business without prior written permission from Bonchon and the employer(s) of the personnel in question.
For prospective Bonchon franchisees in California, this removal means they are not restricted by the franchise agreement from soliciting or hiring management personnel from Bonchon or other Bonchon franchises. This could provide greater flexibility in staffing their own franchise locations. However, it is important to note that the remainder of the paragraph in Section 12.02 remains in effect, meaning other aspects of the covenant not to compete still apply.
It is also important to note that this change only applies to franchises offered and sold in California, as specified in the California Addendum. Franchisees in other states may still be subject to the original "no-poach" clause in Section 12.02. This addendum also states that the covenant not to compete, which extends beyond the termination of the franchise, may not be enforceable under California law.