Under a Bonchon Area Development Agreement, what is the relationship between the Development Territory and the Protected Territories?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If you and we sign an Area Development Agreement, we will grant you a "Development Territory" and you will promise to develop, own and operate franchised Bonchon Businesses within the Development Territory. You will not receive an exclusive Development Territory. You may face competition from outlets that we own at nontraditional locations, from other channels of distribution or competitive brands that we control. Your Development Territory will be set forth on Exhibit A to your Area Development Agreement. The Development Territory includes the Protected Territories granted under the Franchise Agreement for each Bonchon Business that you develop. Each "Protected Territory" is restricted to a geographic area within which you agree to establish and operate a Bonchon Restaurant under a Franchise Agreement. Except in high-density population centers, a Restaurant's Protected Territory consists of the area inside a circle whose center lies at the Bonchon Restaurant Location and whose radius extends outward from the circle's center. The Protected Territory for your Bonchon Business depends on your market area, including population density, drive times, and similar factors. There is no set minimum or maximum Protected Territory. However, we do not anticipate (as a general rule) that the radius will ever be greater than 3 miles from the Bonchon Business or, less than 0.25 miles. If your Bonchon Business will be a Remote Kitchen Restaurant, your Protected Territory will be no greater than a one-tenth (0.1) mile radius from the Bonchon Business. Your Restaurant's specific Protected Territory will be somewhere in that range depending on your specific market and circumstances. For Restaurants located in high-density population centers, your Protected Territory will be determined on a case-by-case basis. Your right to operate a franchised Bonchon Business developed under an Area Development Agreement will be limited to the Bonchon Business' Restaurant Location situated in the respective Protected Territory located in the Development Territory.
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, an Area Development Agreement grants a franchisee a "Development Territory" within which they must develop, own, and operate Bonchon restaurants. This Development Territory is not exclusive, meaning Bonchon can still operate or franchise other outlets within it. The Development Territory encompasses the "Protected Territories" granted under the Franchise Agreement for each Bonchon restaurant the franchisee develops.
A Protected Territory is a specific geographic area where a franchisee is authorized to operate a Bonchon restaurant. For standard locations, this area is typically a circle centered on the restaurant, with a radius that Bonchon anticipates will generally be between 0.25 and 3 miles, though this can vary based on market conditions. For Remote Kitchen Restaurants, the Protected Territory will be no greater than a one-tenth (0.1) mile radius from the Bonchon Business. In high-density population centers, the Protected Territory is determined on a case-by-case basis.
The franchisee's right to operate a Bonchon restaurant under the Area Development Agreement is limited to the restaurant's location within its Protected Territory, which in turn is located within the broader Development Territory. Bonchon retains the right to operate or franchise other businesses, including Bonchon restaurants at nontraditional locations, within the Development Territory, but not within the Protected Territory of an existing franchisee, except as permitted in the Franchise Agreement. This structure provides the developer with defined areas of protection for each unit while allowing Bonchon flexibility in the overall Development Territory.