Under what circumstances can Bonchon terminate the franchise agreement automatically without notice?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement* | Summary |
|---|---|---|
| Bonchon Businesses during a period beginning on the date you receive | ||
| from us a written notice of default and ending on the date the default is | ||
| cured. (Subject to state law.) | ||
| h. "Cause" defined - non-curable defaults | Sections 17.01 and 17.02 | Automatic, without notice: bankruptcy, insolvency, receivership, dissolution, liquidation, foreclosure or levy. On notice to you: a. You fail to open the franchised Restaurant within 300 days following our signing of the Franchise Agreement or cease to operate the Business, abandon the franchise, or, fail to operate your Restaurant for two consecutive days during which you are required to operate, unless due to causes beyond your control. b. You omitted or misrepresented a material fact in information you furnished us in connection with our decision to sign the Franchise Agreement. |
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, there are specific conditions under which Bonchon can terminate the franchise agreement without prior notice to the franchisee. These situations involve serious financial or legal issues that fundamentally undermine the franchisee's ability to operate the business.
Specifically, Bonchon can automatically terminate the franchise agreement if the franchisee declares bankruptcy, becomes insolvent, enters receivership, undergoes dissolution or liquidation, or experiences foreclosure or levy. These events indicate a severe financial crisis that makes it impossible for the franchisee to meet their obligations under the agreement.
These termination conditions are standard practice in franchising, as they protect Bonchon's brand and system from the negative impacts of a franchisee's financial collapse. Prospective franchisees should understand these terms and ensure they have a solid financial plan to avoid such circumstances.