During the Bonchon transition period, is the Participating Franchisee required to comply with the exclusivity requirements outlined in the agreement with Pepsi-Cola?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Agreement, if Participating Franchisee has not entered into a further agreement with Pepsi-Cola for the purchase of Products, Pepsi-Cola and the Bottlers may, upon request by the Participating Franchisee, continue to provide Products to the Participating Franchisee to ensure the uninterrupted supply of beverages, for a transition period not to exceed one hundred twenty (120) days (unless otherwise mutually agreed upon) following expiration or termination of the Agreement (the "Transition Period"). During the Transition Period, the parties will continue to perform pursuant to the terms and conditions of this Agreement, except that Participating Franchisee shall not be required to comply with any exclusivity requirements set forth herein and Pepsi-Cola shall not be obligated to provide any funding or other benefits as set forth in this Agreement. During the Transition Period, Participating Franchisee will provide Pepsi-Cola
and/or the Bottlers with reasonable access to the Outlets, free from any claims of trespass and on a mutually agreed upon schedule, for the purposes of removing Equipment and/or equipment provided by Bottlers for the distribution and display of Packaged Products. For clarity purposes, although Participating Franchisee shall no longer be required to comply with the exclusivity requirements of this Agreement, Participating Franchisee acknowledges and agrees that, except as specifically agreed by Pepsi-Cola in writing, Equipment and/or Packaged Products Equipment, may be used exclusively to display and/or dispense Pepsi-Cola beverage products, even during the Transition Period where permitted by applicable local law.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, during the transition period after the termination or expiration of the agreement with Pepsi-Cola, a Participating Franchisee is not required to comply with the exclusivity requirements typically in place. This transition period lasts for a maximum of 120 days, unless otherwise agreed upon by both parties. During this time, Pepsi-Cola may continue to provide products to ensure an uninterrupted supply of beverages, if requested by the franchisee. However, Pepsi-Cola is not obligated to provide any funding or other benefits during this period.
Although the franchisee is not bound by the exclusivity requirements during the transition period, they must still allow Pepsi-Cola and its bottlers reasonable access to the outlets to remove equipment. Furthermore, unless specifically agreed otherwise in writing with Pepsi-Cola, the franchisee must use the existing equipment exclusively for displaying and dispensing Pepsi-Cola beverage products, where permitted by local law.
This arrangement provides Bonchon franchisees with a grace period to adjust their beverage supply arrangements upon the termination or expiration of their agreement with Pepsi-Cola. It allows them flexibility in sourcing beverages while ensuring a smooth transition and continued service to customers. However, franchisees should be aware of the limitations, such as the continued use of Pepsi-Cola equipment for Pepsi-Cola products and the lack of funding from Pepsi-Cola during this period.