What 'Supremacy of Franchise Agreement' clause must Bonchon franchisees include in their organizational documents?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
All of your business entity's organizational documents (including any partnership, partnership agreements, incorporation documents, organization/formation documents, bylaws, operating agreements, shareholders agreements, buy/sell or equivalent agreements, and trust instruments) will recite that the issuance or transfer of any Interest in you is restricted by the terms of this Agreement, and that the sole purpose for which you are formed (and the sole activity in which you are or will be engaged) is the conduct of a franchised Business pursuant to one or more franchise agreements from us and that your activities will be exclusively confined to such purpose. Your organizational documents will also include a "Supremacy of Franchise Agreement" clause reciting the following: "To the extent any provision of this Agreement conflicts, violates or is inconsistent with any provision of the Bonchon Franchise Agreement, the parties hereto agree that the provisions of such Franchise Agreement shall supersede the same and that the parties hereto shall enter into such amendments to this agreement as are necessary in order to make the relevant provisions consistent with or non-violative of the provisions of the Bonchon Franchise LLC Franchise Agreement."
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee operates their Bonchon business through a business entity, the organizational documents of that entity must include a specific 'Supremacy of Franchise Agreement' clause. This clause ensures that the terms of the Bonchon Franchise Agreement take precedence over any conflicting provisions in the entity's organizational documents. This requirement is designed to protect Bonchon's interests and ensure uniformity in the operation of its franchises.
The required clause states that if any provision within the business entity's organizational documents conflicts with the Bonchon Franchise Agreement, the Franchise Agreement's provisions will supersede the conflicting ones. Furthermore, the parties involved must amend the organizational documents to align them with the Franchise Agreement, ensuring consistency and compliance. This clause is crucial for maintaining the integrity of the franchise system and preventing franchisees from circumventing the Franchise Agreement through their business entity's structure.
For a prospective Bonchon franchisee, this means that they must carefully draft their business entity's organizational documents to include the exact 'Supremacy of Franchise Agreement' clause as specified by Bonchon. Failure to include this clause or any deviation from the required language could potentially lead to legal issues or even termination of the Franchise Agreement. Franchisees should consult with legal counsel to ensure their organizational documents comply with Bonchon's requirements and applicable laws. This requirement is not uncommon in franchising, as franchisors often seek to maintain control and consistency across their franchise network.