Under what conditions can a Bonchon franchisee own stock in a Competitive Business without violating the non-compete agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Nothing in this Agreement will prevent you from owning for investment purposes only up to an aggregate of 5% of the capital stock of any Competitive Business you do not control, so long as the Competitive Business is a publicly held corporation whose stock is listed and traded on a national or regional stock exchange.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee can own a limited amount of stock in a Competitive Business under specific conditions without violating the non-compete agreement. The franchisee is permitted to own up to 5% of the capital stock of a Competitive Business, provided they do not control that business.
Furthermore, this allowance is contingent on the Competitive Business being a publicly held corporation. The stock of the Competitive Business must be listed and traded on a national or regional stock exchange. This condition ensures that the franchisee's investment is passive and does not involve direct influence or control over the Competitive Business's operations or strategies.
This exception to the non-compete agreement allows Bonchon franchisees to make minor investments in publicly traded competitors without being in violation of their franchise agreement. However, exceeding the 5% ownership limit or investing in a privately held Competitive Business would breach the agreement.