Under what condition is a Bonchon franchisee exempt from the requirement to purchase from a designated supplier under a systemwide supply contract?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, in the exercise of our business judgment, enter into supply contracts either for all Bonchon Businesses or a subset of Bonchon Businesses situated within one or more geographic regions (each, a "systemwide supply contract"). We may enter into systemwide supply contracts with one or more vendors of products, services or equipment that all company-owned and franchised Bonchon Restaurant Businesses in a geographic area will be required to purchase, use or sell. If we do so, then immediately upon notification, you, we and all other Bonchon Businesses in the geographic area must purchase the specified product, service or equipment only from the designated supplier. However, if at the time of our notification you are already a party to a non-terminable supply contract with another vendor or supplier for the product, service or equipment, then your obligation to purchase from our designated supplier under the systemwide supply contract will not begin until the scheduled expiration (or earlier termination) of your pre-existing supply contract.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee is exempt from purchasing from a designated supplier under a systemwide supply contract if they are already party to a non-terminable supply contract with another vendor or supplier for the same product, service, or equipment at the time Bonchon implements the systemwide supply contract.
In this case, the franchisee's obligation to purchase from Bonchon's designated supplier will not begin until the earlier of either the scheduled expiration or the actual termination of the franchisee's pre-existing supply contract. This exemption protects franchisees from being forced to break existing agreements when Bonchon introduces a new systemwide supply contract.
This condition provides a degree of security for franchisees who have pre-existing supply agreements. However, it's important to note that once the franchisee's existing contract expires or is terminated, they will be required to comply with Bonchon's systemwide supply contract and purchase from the designated supplier. Franchisees should carefully consider the terms and conditions of any supply contracts they enter into before joining the Bonchon system, as these contracts could impact their future obligations under the franchise agreement.