Under the Bonchon Area Development Agreement, is there a requirement to develop a specific number of Businesses within each geographic trade area?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
terminate immediately upon the expiration or termination of the Area Development Agreement for any reason. If your Development Territory is comprised of various geographic trade areas within a particular or one or more cities, states or regions and we designate a specific number of Businesses that you may develop or operate within each geographic trade area, your exclusive right to develop and operate Bonchon Businesses within a certain geographic trade area will terminate once you have developed the specified number of Bonchon Businesses in the subject geographic trade area. For the avoidance of doubt, if your Development Territory includes City A, City B and City C and we grant you the right to develop two Bonchon Businesses in each city, then your right to develop Bonchon Businesses in City A will cease once you developed and commenced operations of two Bonchon Businesses. Accordingly, we will have the right to develop and operate or grant a third party the right to develop and operate additional Bonchon Businesses in City A, even if you have not fully satisfied your development obligations under your Area Development Agreement with respect to the other geographic trade areas within the Development Territory (e.g. in City B and City C) (the "Trade Area Satisfaction Exception"); provided, however, that neither we nor any third party will have the right to develop and operate a Bonchon Business within the Protected Territory granted under the Franchise
Agreement for each of the Bonchon Restaurants that you developed in City A pursuant to the Area Development Agreement except as otherwise permitted in the Franchise Agreement.
Outside of the Development Territory, we and our affiliates reserve the right to operate any number of Bonchon Businesses, and to authorize others to operate them, at any location we choose (including one or more locations that may be proximate to, but not within, the Development Territory).
Source: Item 12 — TERRITORY (FDD pages 60–65)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Area Development Agreement may designate a specific number of Bonchon businesses that the developer must open within certain geographic trade areas. If Bonchon designates a specific number of businesses for a trade area, the developer's exclusive right to develop and operate Bonchon businesses in that specific area ends once the specified number of businesses are developed and in operation.
For example, if the Development Territory includes City A, City B, and City C, and the developer has the right to develop two Bonchon businesses in each city, the right to develop in City A ceases once two Bonchon businesses are operational. Bonchon then has the right to develop and operate, or grant a third party the right to develop and operate, additional Bonchon businesses in City A, even if the developer has not fulfilled their development obligations in City B and City C. This is referred to as the "Trade Area Satisfaction Exception."
However, neither Bonchon nor any third party can develop and operate a Bonchon business within the Protected Territory granted under the Franchise Agreement for each of the Bonchon Restaurants that the developer has already established in City A, except as otherwise permitted in the Franchise Agreement. The number of Bonchon Businesses a developer must open and operate in their Development Territory is outlined in the Development Schedule in Section 6.01 of the Area Development Agreement. The developer must comply with the timetable provided in the Development Schedule, which may require the opening and operation of two or more Bonchon Businesses.