What state's law governs the Bonchon Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Section in Area Development Agreement | Summary |
|---|---|---|
| l. Our approval of transfer by you | Section 12.02, 12.03 and 12.04 | No transfer without our consent except as provided in Area Development Agreement (for example, transfer to a business entity you form for convenience). (Subject to state law.) |
| m. Conditions for our | Sections 12.03 | See l., above. |
| approval of transfer | and 12.04 | |
| n. Our right of first | None | Not applicable. |
| refusal to purchase | ||
| your business | ||
| o. Our option to | None | Not applicable |
| purchase your business | ||
| p. Your death or disa- bility | Section 12.04 | On your death or disability (if you are an individual), or the death or disability of your last surviving owner (if you are a business entity), that person’s rights pass to his or her "Estate". The Estate may continue operating the Business if it provides an acceptable Area Business Manager. This Area Business Manager must assume full time operation of the franchise within 90 days of death or disability. (Subject to state law.) |
| q. Non-competition | Section 11.01 | No involvement in competing business anywhere. (Subject to state law.) |
| covenants during the | ||
| term of the franchise | ||
| r. Non-competition covenants after the franchise is terminated or expires | Section 11.01 | No involvement in competing business for 2 years within your Development Territory, within a 20 mile radius of the perimeter of your Development Territory or within a 20 mile radius of the perimeter of (or within) any Bonchon Business (whether company-owned, franchised or otherwise established and operated). (Subject to state law.) |
| s. Modification of the | Section 18.05 | No oral modifications. |
| agreement | ||
| t. Integration/ merger clause | Section 18.05 | Only the terms of the Area Development Agreement, the Exhibits to the Area Development Agreement and all agreements signed with it are enforceable (subject to state law). Any representations or promises outside of the Disclosure Document and franchise agreement may not be enforceable. |
| u. Dispute resolution by | None | Not applicable. |
| arbitration or mediation | ||
| v. Choice of forum | Sections 18.13 and 13.03 | Litigation must be in New York, New York, except that we may bring an action for an injunction in any court with jurisdiction (see Area Development Agreement). (Subject to state law). |
| w. Choice of law | Section 18.12 | New York law applies. Your state law may supersede this provision and it may not be enforceable in your state. (Subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 71–81)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Area Development Agreement is generally governed by New York law, as indicated in Section 18.12. However, this is subject to an important caveat: your state's laws may supersede this provision, rendering New York law unenforceable in your specific state. This means that while the agreement specifies New York law, the laws of the state in which the franchisee operates could take precedence.
This "choice of law" provision is a common element in franchise agreements, but its enforceability can vary. The purpose is to provide a consistent legal framework for the agreement. However, state laws are designed to protect franchisees, and these protections can override the chosen law.
For a prospective Bonchon franchisee, it is crucial to understand whether the New York law provision will be enforced in their state. They should consult with a legal professional to determine how their local state laws interact with this clause. This will help them understand their rights and obligations under the Area Development Agreement and ensure they are not unknowingly waiving any protections afforded by their state.