Are there any exceptions to Bonchon's requirement for approval of an Area Development Agreement transfer?
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.) |
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, Bonchon requires approval for any transfer of the Area Development Agreement. However, there is an exception to this rule. Bonchon does not require consent for transfer to a business entity the franchisee forms for convenience. This exception is subject to state law.
This means that a franchisee can transfer the Area Development Agreement to a business entity that they create without needing Bonchon's prior approval, provided that it's merely for convenience. This could be beneficial for franchisees who want to structure their business in a specific way for liability or tax purposes.
It is important to note that this exception is subject to state law, so franchisees should consult with an attorney to ensure that the transfer is valid and complies with all applicable laws. Additionally, while the FDD outlines this specific exception, franchisees should carefully review the Area Development Agreement for any other conditions or requirements related to transfers.